USOIL Breaches Key Support After its First Losing Week Since the SVB Turmoil

  • USOil

USOIL Analysis

The commodity has slumped to the lowest levels since 2021 in mid-March, due to the collapse of the Silicon Valley Bank and the ensuing financial turmoil that sparked fresh fears over an economic slowdown. However, it managed to stage a relief rally after that, which culminated to this month's 2023 highs, sparked by the surprise production cuts by OPEC+.

Last week China released strong economic data, which showed that the recovery is well underway in the world's largest importer of oil. Markets though overlooked that, focusing instead to persistent inflation and prospects of tight monetary policy by the Fed.

This caused USOil to end its four-week profitable streak and remains at the beginning of the current one, breaching the EMA200 (black line) and threatening the 38.2% Fibonacci of the March-April advance. Daily closes below this region can shift immediate bias to the downside and bring 71.50-70.06 in the spotlight, but we are cautious about sustained weakness.

China's reopening and the massive output cuts are supportive and the decline looks a bit stretched. As long as it can hold current levels, it does not relinquish the opportunity for higher highs (83.55), although a bigger advance that would challenge 90.36 looks hard at this stage.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

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