USOIL Upbeat at Critical Tech Junction
USOIL Analysis
The commodity slumped to the lowest level in more than one year earlier this month, as the banking rout unfolded, sparking worries for the health of the financial system and recession fears creeped back in. Those concerns seem to have eased, after robust actions from authorities to contain the fallout, as well as verbal reassurances.
The turmoil and prospects of credit tightening, forced the Fed into a conservative shift, with a small 25 basis points increase last week and the projections of one more hike of the same size before pausing.
The above factors have led USOil to a solid rebound and a strong Monday rally, supported by the biggest decline in US stockpiles since November. Yesterday's EIA report U.S. commercial crude oil inventories decreased by 7.5 million barrels last week. [1]
USOil tries to take out the critical EMA200 (black line) and daily closes above it would shift bias on the upside, but does not inspire much confidence at this stage for challenging the 2023 highs (82.64). Despite the recent advance, the commodity still heads to a losing month and its previous visits above the EMA200 have been short-lived. There is risk for sub-70.00 moves, although 62.42-61.72 looks distant.
Markets now turn to US GDP and PCE inflation update, which would be the first test for the Fed's dovish shift and could determine the trajectory of the commodity.
Nikos Tzabouras
Senior Market Specialist
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.
References
| Retrieved 29 May 2023 https://ir.eia.gov/wpsr/wpsrsummary.pdf |
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