Daily Analysis For WTI Crude (US Oil) 16-06-2023

Daily Analysis For WTI Crude (US Oil) 16-06-2023

WTI Crude Oil (US Oil) Analysis


Key Points: -


·       WTI crude oil prices are experiencing a pullback from their one-week high, influenced by a combination of mixed factors from the United States and China.



·       Buyers in the oil market are reassessing the demand signals emanating from China, as well as the forecasts provided by the US Energy Information Administration (EIA), especially in light of the recent hawkish stances adopted by central banks worldwide.


·       Traders should closely monitor risk catalysts and mid-tier economic data from the United States, as they could provide fresh impetus to the energy market and influence WTI crude oil prices.


Today's Scenario: -


WTI crude oil is currently holding onto slight losses near the $70.70 level as energy traders pause following a volatile trading session on Thursday. The oil market witnessed a weekly high the previous day, driven by a weakened US dollar and an overall risk-on sentiment. However, prices retreated during early Friday trading.


On Thursday, it was reported by Reuters that China's oil refinery throughput in May increased by 15.4% compared to the same period last year, reaching its second-highest level on record. This suggests a rise in energy demand from the world's largest commodity consumer and contributed to the upward momentum in oil prices, along with the weakened US dollar.


Positive factors supporting WTI crude oil prices include optimistic forecasts from the US Energy Information Administration (EIA) and a rate cut by the People's Bank of China (PBoC). The International Energy Agency (IEA) stated on Wednesday that global oil demand is expected to grow by 2.4 million barrels per day this year, reaching a record of 102.3 million barrels per day. Additionally, the PBoC recently announced a 10 basis points rate cut, the first in 10 months.


However, despite stronger-than-expected retail sales growth, mostly disappointing US data, along with the European Central Bank's (ECB) hawkish actions, weighed on the US Dollar Index (DXY), causing it to experience its largest decline in over three months. The DXY reached its lowest level since May 12, trading at 102.15 at the latest.


The positive performance of Wall Street, lower bond yields, and the market's uncertainty regarding the likelihood of a July rate hike by the Federal Reserve, according to the CME's FedWatch Tool, are also supporting WTI crude oil prices.


On the other hand, the downside risks for energy bulls include weak retail sales and industrial production data from China, as well as the current consolidation phase in the market.


To navigate the current situation, WTI traders should closely monitor risk factors and keep an eye on the preliminary readings of the Michigan Consumer Sentiment Index (CSI) for June and five-year inflation expectations, as these could provide clearer direction for oil prices.


Diagram of WTI Crude Oil (US Oil): -


Economic Events: -


Date      Event                                                                                                           Impact         Currency

 01:30   (United States) Foreign Bond Investment                                        Low  USD

 01:30   (United States) Net Long-term TIC Flows                                                 Medium   USD

 01:30   (United States) Overall Net Capital Flows                                         Low  USD

 04:00   (New Zealand) Business NZ PMI                                                              Medium     NZD

 08:30   (Japan) BoJ Interest Rate Decision                                                   High    JPY

 12:30   (Austria) Inflation Rate MoM                                                                           Low     EUR

 12:30   (Austria) Inflation Rate YoY                                                                              Low     EUR

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

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

 12:30   (Austria) CPI                                                                                                     High        EUR

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

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

 12:30   (United States) Fed Bullard Speech                                            Medium   USD

 13:30   (European Union) ECOFIN Meeting                                            Medium   EUR

 13:30   (Italy) Inflation Rate YoY                                                                           Medium      EUR

 13:30   (Italy) Harmonised Inflation Rate MoM                                                          Low    EUR

 13:30   (Italy) Harmonised Inflation Rate YoY                                                             Low    EUR

 13:30   (Italy) Inflation Rate MoM                                                                  Low     EUR

 13:30   (Italy) CPI                                                                                                           High       EUR

 14:30   (Euro Area) Inflation Rate MoM                                                                      Low     EUR

 14:30   (Euro Area) Core Inflation Rate YoY                                                   Low    EUR

 14:30   (Euro Area) Inflation Rate YoY                                                                   Medium    EUR

 14:30   (Euro Area) Labour Cost Index YoY                                                    Low   EUR

 14:30   (Euro Area) Wage Growth YoY                                                                         Low     EUR

 14:30   (Euro Area) CPI                                                                                                 High       EUR

 14:30   (Malta) Inflation Rate YoY                                                                  Low     EUR

 15:30   (Portugal) PPI YoY                                                                                             Low       EUR

 15:30   (Portugal) PPI MoM                                                                                         Low       EUR

 17:15   (United States) Fed Waller Speech                                            Medium   USD

 18:00   (Canada) Foreign Securities Purchases                                                            Low   CAD

 18:00   (Canada) Foreign Securities Purchases by Canadians                       Low CAD

 18:00   (Canada) Wholesale Sales MoM                                                                      Low     CAD

 19:30   (United States) Michigan Consumer Sentiment                                              High USD

 19:30   (United States) Michigan Inflation Expectations                                             Low  USD

 19:30   (United States) Michigan Current Conditions                                     Low  USD

 19:30   (United States) Michigan 5 Year Inflation Expectations                                 Low USD

 19:30   (United States) Michigan Consumer Expectations                           Low USD

 22:30   (United States) Baker Hughes Oil Rig Count                                     Low  USD

 22:30   (United States) Baker Hughes Total Rig Count                                                Low  USD


Buy Scenario: -


WTI prices continued their upward momentum and crossed above the important $70.00 per barrel level. However, it's worth noting that this move was accompanied by a decrease in open interest and volume, which suggests a lack of strong support for further continuation of the rebound in the immediate future. Currently, bullish attempts seem to face resistance near the monthly highs around the $75.00 level. Till we do not advise to buy in WTI US oil.


Selling Scenario: -


WTI crude oil experienced a pullback as it failed to close above both the 21-day moving average (DMA) and a descending resistance line that has been in place for two weeks. The resistance levels at $71.15 and $71.30 were not breached by the time of writing, leading to the pullback in oil prices. Till we did not advise to sell WTI Crude oil.


Support and Resistance Level: -

 Support           Resistance  

 S1 68.90   -     R1 71.90

 S2 67.02  -      R2 73.03

 S3 65.90  -      R3 74.91


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