USOIL Rebounds as Demand Fears Ease & Looks to Critical Tech Levels

  • USOil

USOIL Analysis

The commodity slumped to its third straight losing week and to the lowest level in more than a year, due to fears of recession that can weigh on demand. China's PMI printed 49.2 in April, showing that factory activity contracted for the first time this since December, in the world second largest consumer of oil. Furthermore, banking fears flared up again in the US, with regional lenders in the spotlight. Regulators facilitated the sale of troubled First republic to JP Morgan Chase [1], but then PacWest's stock slumped as it continues to explore "strategic asset sales". [2]

Fears of recession eased however in the last days of the past week, helping the oil demand outlook, due to a series of factors, such the first expansion since late-last year in manufacturing PMI and the strong services PMI. Most importantly though, the US Fed opened the door to a pause of its aggressive tightening cycle [3], after the March 2022 lift-off. This allowed markets to cheer Friday's strong jobs report as a sign against recession, rather than focusing on its monetary policy implications. Furthermore, domestic trips in China for the five-day holiday break that began on April 29, surged more than 70% compared to last year. [4]

The improvement in sentiment allowed USOil to post a significant rebound. This brings the critical 75.60-94 region in its crosshair, which includes the EMA200 and the 38.2% Fibonacci of the 2023 high/low drop. Daily closes above it will shift immediate bias on the upside, but we are cautious at this stage for bigger advance that would challenge 80.95.

On the other hand, fears around US banks and economic slowdown don't go away, while economic indicators from China are mixed – factors that pose headwinds for USOil. As long as the rebound is contained below the aforementioned key resistance, risk for new slide towards 62.42-61.72 remains in play. However, sustained weakness continues to look difficult given the OPEC+ production cuts.

Markets now expect the latest CPI inflation figures from the United States and China, for a look on consumer demand in the biggest economies of the world.

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.



Retrieved 08 May 2023


Retrieved 08 May 2023


Retrieved 08 May 2023


Retrieved 25 Jun 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.