- US oil is fundamentally firm, but technicals momentum is slowing at daily resistance.
- FOMC and GDP data from the US will be key events.
In the open, US West Texas Intermediate (WTI) crude prices are bid +0.26% at $72.21 at the time of writing.
Energy markets have posted a strong recovery of late.
''Firm demand hindered shale supply and the cautious monthly increase in supply from OPEC+ should not be enough to prevent a deep deficit in the coming month, which should continue to fuel stronger prices and tightening spreads,'' analysts at TD Securities said.
WTI edged higher on Friday to close up by a modest 0.46%, extending deeper into daily resistance in a strong corrective recovery from Monday's steep slide and Tuesday lows of $65.11.
''With officials from well-vaccinated countries reluctant to reinstate harsh lockdown measures, the risk of demand growth faltering is diminishing,'' analysts at ANZ bank explained.
''In fact, gasoline demand in several major regions has returned to pre-pandemic levels amid rising road traffic data. Even the jet fuel market is showing signs of improvement.''
FOMC & key US data
On the cards for the week ahead, the Federal Open Market Committee will be key.
The Federal Reserve will have to deal with the reality of above-trend growth and higher than first expected inflationary pressures.
The idea of tapering will emerge in the fourth quarter of 2021, as well as the likelihood of the first hike coming in 4Q22, markets will be on edge.
We also have 2Q21 Gross Domestic Product growth this week. This is expected at 8-9% quarter-on-quarter annualized.
June readings for personal consumption and the PCE deflator, all arrive strong, the US dollar should continue to gain.
Subsequently, this could weigh on the commodity complex if the US dollar rallies.
However, oil prices were be expected to remain robust given the pace of the US economic recovery.
WTI technical analysis
Technically, the price is pressuring the critical resistance with 72.30 on the radar for the open.
A break there will level the bulls in good stead for a higher high in the coming days.
The 78.6% Fibonacci retracement of the prior daily bearish leg is located at 73.30.
Meanwhile, the monthly 61.8% Fibonacci retracement in the 64.50/60s support area is compelling:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD jitters post-Fed with NFP Friday over the horizon
EUR/USD cycled familiar territory on Wednesday after the US Federal Reserve held rates as many investors had expected. However, market participants were hoping for further signs of impending rate cuts from the US central bank.
Gold prices skyrocketed as Powell’s words boosted the yellow metal
Gold prices rallied sharply above the $2,300 milestone on Wednesday after the Federal Reserve kept rates unchanged while announcing that it would diminish the pace of the balance sheet reduction.
Solana price dumps 21% on week as round three of FTX estate sale of SOL commences
Solana price is down almost 5% in the past 24 hours and over 20% in the last seven days. The dump comes as the broader crypto market contracts with Bitcoin price leading the pack as it slides below the $58,000 threshold to test the Bull Market Support Band Indicator.
The FOMC whipsaw and more Yen intervention in focus
Market participants clung to every word uttered by Chair Powell as risk assets whipped around in a frenetic fashion during the afternoon US trading session.