Oil Price Forecast: WTI consolidates recovery gains below $25 ahead of US data

WTI clings to recovery gains amid US-China trade optimism.
Economic re-openings boost oil demand growth prospects globally.
Next of relevance remains the key US NFP and Rigs count data.

Dhwani Mehta FXStreet

The WTI (June futures on Nymex) recovery following Thursday’s slump lost legs just shy of the 25 handle in early Europe, as the bulls take a breather ahead of the key US macro events.

The black gold is now consolidating the steady recovery in a $1 range around 24.30 region, still defending 3.20% gains. The bullish undertone in the US oil is partly on account of the expectations of a pick-up in the oil demand, as most major global economies move to re-opening.

Australia announced the re-opening of the economy from the coronavirus induced lockdown in three stages. Michigan and California, allowed factories to reopen over the next few days. Meanwhile, the UK is set to announce the lockdown easing restrictions on Sunday.

Further, falling Russian oil output in the first week of May, in compliance with the OPEC+ output cut deal, also keeps the upbeat tone alive. However, the main catalyst for the renewed strength in the barrel of WTI this Friday is the optimism on the US-China trade talks, which has lifted the overall market sentiment.

Thursday saw two-way trading in oil after the prices bounced above 26 after the Saudi Arabian state oil company, Aramco, raised most June crude pricing to Asia by $1.40 to $6.5. The rally was reversed in the US last session and rates slumped to 22.95 levels after Rystad Energy projected global oil demand to decrease 10.9% in 2020.

Looking ahead, the focus now remains on the all-important US employment numbers and Baker Hughes Oil Rigs Count data for fresh near-term trading impetus in oil.

WTI technical levels to watch

Oil bulls are gathering pace to clear the 25 barrier, above which the next resistance is seen at daily R1 of 25.88. To the downside, Thursday’s low of 22.95 could offer immediate respite to the bulls. A failure to resist above the latter could open floors to 19.55 (10-DMA).

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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