Crude Oil Price Jumps on Optimism Ahead of OPEC+ Meeting. Where to for WTI?
Crude Oil, OPEC+, WTI, US Dollar, Economic Data, Treasury Yields – Talking Points
- Crude oil found firmer footing going into the Friday session after dipping
- The June OPEC+ meeting could see some action with conflicting views among members
- The technical picture might be saying something. Will WTI resume rallying?
The crude oil price went to a three-week low yesterday before staging a solid recovery with markets taking onboard some positive economic news and the US Dollar facing some headwinds. The market is now focusing on the OPEC+ meeting that kicks off this weekend.
China’s better-than-expected Caixin PMI got the ball rolling, compensating for Wednesday’s weak official PMI reading. Japan’s private capital expenditure was a beat, as was the US ADP jobs data. Eurozone CPI eased as well, further buoying the mood.
Not every piece of data was rosy, and all the statistics can be found on the economic calendar here. Markets also appear to be optimistic that the US debt ceiling deal will pass through the Senate late Friday.
It seems that Treasury yields slid lower on the prospect of a resolution and might continue to do so should the vote pass without incident. The benchmark 2-year note is around 30 basis points lower from the peak seen at this time last week of 4.64%.
For the oil market, the focus will be on the OPEC+ meeting that will begin this Sunday in Vienna. A number of top officials from the oil-producing nations have been making ructions around production targets.
Of intrigue is the lack of coherency between the commentary and this places significant focus on this gathering. The cut to production announced by the cartel in early April saw a price gap higher in oil.
Headlines emanating from this assembly may trigger volatility to start next week.
Updated crude oil prices can be found here.
WTI CRUDE OIL TECHNICAL ANALYSIS
The WTI crude oil front month futures contract made a low at 67.03 yesterday which was just above a breakpoint at 66.82. These levels may provide support, as well as the breakpoints and prior lows of 66.12, 64.36, 63.64, 62,43, 61,74 and 61.56.
After making that low, it rallied and the price action has now created a Bullish Engulfing Candlestick formation and could indicate that a bullish reversal could unfold.
On the topside, resistance might be at the previous peaks at 74.73, 76.92 and 79.18 ahead of the cluster zone in the 82.50 – 83.50 area.
--- Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.