U.S. crude oil prices are on track to retest its 2023 highs!
In case you missed it, crude oil prices have been gaining ground for almost two weeks now as traders priced in China – the world’s second-largest economy – recovering from its zero-COVID policies.
It also didn’t hurt that the U.S. dollar has taken a step back ahead of Powell’s testimony and Friday’s U.S. NFP report and made USD-denominated commodities like WTI more attractive.
WTI Crude Oil (USOIL): 1-hour
WTI crude oil (USOIL) prices found support from the $74 zone and is now trading closer to the $80 psychological area.
Can prices continue to rise over the next couple of days?
Stochastic is already in “overbought” territory and is pointing to potential selling.
WTI hasn’t quite reached the $81.50 range resistance, though, so there’s still more room for WTI to rise before the commodity sees a bearish momentum.
I’ll be looking at Powell’s testimony later today for clues on whether the Fed thinks the markets are pricing enough rate hikes this year. Markets currently see the Fed’s fund rates “peaking” at around 5.4% but recent inflation and Fed speeches are opening talks of rates rising to just under 6%. Yipes!
If markets focus on rising U.S. interest rates, China’s growth momentum concerns, or a rift between Saudi Arabia and the United Arab Emirates – two of OPEC’s biggest producers – leading to higher oil supplies, then WTI could turn lower from the $80 – $81 major area of interest.
USOIL could revisit its $79 inflection point if not the $77.50 mid-range support levels.
But if risk-taking becomes an intraweek market theme, then WTI prices might retest higher inflection points. The $81.50 psychological area and $82.50 previous highs will be good initial targets in case of an upswing.
What do you think? Will the range resistance hold for another day? Or will we see an upside breakout in the next trading sessions?
