Daily Analysis For WTI Crude (US Oil) 13-06-2023

Daily Analysis For WTI Crude (US Oil) 13-06-2023

WTI Crude Oil (US Oil) Analysis


Key Points: -


·       Oil prices have experienced a strong recovery from the $67.00 level, but there are indications that the upside may be limited.


·       The possibility of a recession in the US economy gaining strength could potentially lead to a significant decline in oil prices.


·       Furthermore, the persistent weakness in factory activity across the Eurozone has further increased expectations of continued contraction in the quarterly GDP, which could have a negative impact on oil prices.


Today's Scenario: -


West Texas Intermediate (WTI) futures on NYMEX have experienced a strong recovery after finding significant support near $67.00 during the European session. However, the upward movement in oil prices appears to be limited as investors await the Federal Reserve's (Fed) interest rate decision, scheduled to be announced on Wednesday.


Market participants are cautious about the Fed's policy stance, as a more aggressive tightening approach by Fed Chair Jerome Powell could raise concerns about a potential recession in the United States. The oil price is currently impacted by weak demand in China and the increased likelihood of a recession in the Eurozone. The growing anticipation of a recession in the US economy could potentially lead to a significant decline in oil prices.


In China, the deflationary trend in consumer and producer data indicates that both domestic demand and exports are exerting significant pressure on factory activity. Despite supportive monetary and fiscal policies implemented by the Chinese government, firms are not fully utilizing their capacity.


In the Eurozone, the German economy has already entered a recession, as there have been consecutive contractions in Gross Domestic Product (GDP) figures. The final reading of Eurozone Q1 GDP also confirms the ongoing contraction. The consistent weakness in Eurozone factory activity further reinforces expectations of continued contraction in GDP.


Prior to the Fed's policy decision, the US Consumer Price Index (CPI) data will be closely monitored. Analysts at RBC Economics anticipate a significant slowdown in annual growth of US CPI to 4.1% in May, compared to 4.9% in April. Gas prices in May were 20% lower than the previous year. Oil prices have declined following Russia's invasion of Ukraine. Additionally, soaring food inflation has eased in recent months, with consecutive monthly declines in grocery prices in March and April. Surprisingly higher US inflation could exert significant pressure on oil prices.


Diagram of WTI Crude Oil (US Oil): -


Economic Events: -


Date    Event                                                                                                                Impact    Currency

4:15     (New Zealand) Visitor Arrivals YoY                                                        Low      NZD

5:20     (Japan) BSI Large Manufacturing QoQ                                                Low      JPY

6:00     (Australia) Westpac Consumer Confidence Change                       High     AUD

6:00     (Australia) Westpac Consumer Confidence Index                           High     AUD

7:00     (Australia) NAB Business Confidence                                                 High     AUD

11:30   (Germany) Harmonised Inflation Rate MoM                                        Low      EUR

11:30   (Germany) Harmonised Inflation Rate YoY                                           Low      EUR

11:30   (Germany) Inflation Rate MoM                                                         Medium      EUR

11:30   (Germany) Inflation Rate YoY                                                            Medium      EUR

11:30   (Germany) CPI                                                                                             High      EUR

11:30   (United Kingdom) Average Earnings excl. Bonus (3Mo/Yr)              Low      GBP

11:30   (United Kingdom) Average Earnings incl. Bonus (3Mo/Yr)       Medium      GBP

11:30   (United Kingdom) Unemployment Rate                                               High      GBP

11:30   (United Kingdom) Claimant Count Change                                         High      GBP

11:30   (United Kingdom) Employment Change                                               High      GBP

11:30   (United Kingdom) HMRC Payrolls Change                                           Low      GBP

12:30   (Lithuania) Current Account                                                                    Low      EUR

12:30   (Spain) CPI                                                                                                  High      EUR

12:30   (Spain) Core Inflation Rate YoY                                                              Low       EUR

12:30   (Spain) Harmonised Inflation Rate MoM                                             Low       EUR

12:30   (Spain) Harmonised Inflation Rate YoY                                                Low       EUR

12:30   (Spain) Inflation Rate MoM                                                                     Low       EUR

12:30   (Spain) Inflation Rate YoY                                                                        Low       EUR

13:30   (China) Total Social Financing                                                               Low       CNY

13:30   (China) New Yuan Loans                                                                          Low       CNY

13:30   (China) M2 Money Supply YoY                                                               Low       CNY

13:30   (China) Outstanding Loan Growth YoY                                                Low       CNY

14:10   (Spain) 3-Month Letras Auction                                                             Low       EUR

14:30   (Euro Area) ZEW Economic Sentiment Index                            Medium        EUR

14:30   (Germany) ZEW Economic Sentiment Index                                    High        EUR

14:30   (Germany) ZEW Current Conditions                                                    Low        EUR

14:30   (United Kingdom) 10-Year Treasury Gilt Auction                             Low        GBP

14:40   (Italy) 3-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 7-Year BTP Auction                                                                     Low         EUR

14:40   (Italy) 30-Year BTP Auction                                                                  Low         EUR

15:00   (Germany) 5-Year Bobl Auction                                                          Low          EUR

15:15   (Euro Area) ECB Enria Speech                                                            Low          EUR

15:30   (Latvia) Current Account                                                                      Low         EUR

15:30   (United States) NFIB Business Optimism Index                            Low          USD

17:30   (Ecuador) Balance of Trade                                                                 Low          USD

18:00   (United States) Core Inflation Rate MoM                                 Medium          USD

18:00   (United States) Inflation Rate MoM                                                 High          USD

18:00   (United States) Core Inflation Rate YoY                                          High          USD

18:00   (United States) Inflation Rate YoY                                                    High          USD

18:00   (United States) CPI                                                                               High          USD

18:00   (United States) CPI s.a                                                                        High          USD

18:15   (Germany) Current Account                                                                Low          EUR

18:25   (United States) Redbook YoY                                                             Low          USD

19:30   (United Kingdom) BoE Gov Bailey Speech                              Medium         GBP

20:30   (United Kingdom) BoE Dhingra Speech                                         Low          GBP

21:00   (United States) 52-Week Bill Auction                                              Low          USD

22:30   (United States) 30-Year Bond Auction                                            Low          USD


Buy Scenario: -


On the upside, any attempted recovery may face resistance near the round figure of $68.00. If prices manage to surpass this level, a short-covering rally could potentially lift Crude Oil prices to the resistance zone around $68.50 to $68.55. Further buying pressure might pave the way for a continued recovery towards the $69.00 mark. Eventually, if the bullish momentum persists, prices could move beyond the region of $69.40 to $69.45, aiming to reclaim the psychological mark of $70.00. Till we do not advise to buy in WTI US oil.


Selling Scenario: -


if Crude Oil prices sustain a break below the $67.00 level, it would confirm a fresh bearish breakdown. In that case, the downward momentum may accelerate, potentially leading to a slide towards the intermediate support at $66.55, followed by the round figure of $66.00. Further downside movement could take prices to levels below $66.00, targeting the area around $65.45, the psychological mark of $65.00, and the region between $64.40 and $64.30, which represents the year-to-date low reached in May. Till we did not advise to sell WTI Crude oil.


Support and Resistance Level: -

 Support           Resistance  

 S1 66.10   -     R1 69.72

 S2 64.71  -      R2 71.96

 S3 62.47  -      R3 73.34


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