WTI Crude Oil futures (NYMEX: CL) are battling indecision, caught between looming inflation concerns and the upcoming OPEC+ meeting on June 2nd. A stronger US dollar, fueled by expectations of the Federal Reserve maintaining higher interest rates for longer, is dampening demand for oil.
The EIA data on Thursday is expected to confirm a drawdown in US crude oil inventories, potentially offering some short-term support. However, lingering inflation worries, as highlighted by the hotter-than-expected German inflation data, could limit significant price advances.
The focus remains on the outcome of the OPEC+ meeting this weekend. If the group decides to extend production cuts, it could provide a much-needed boost to prices. Conversely, a decision to maintain current production levels or even raise output could lead to a price decline.
Technical Analysis
WTI Crude Oil is currently trading around $79.24 per barrel, hovering slightly below its opening price for the day. The price action is caught in a tug-of-war between the upward-sloping 20-SMA (green line) and the downward-sloping RSI indicator.
The recent price rejection at the $80.55 resistance level highlights the ongoing struggle for bullish momentum. A sustained break and close above this level, accompanied by significant trading volume, could trigger a push towards $82.55 and potentially $84.50.
However, the downward-pointing RSI suggests a potential downside correction. If the price falls below the cluster of 20-SMA, 50-SMA (blue line), and 100-SMA (orange line), with significant volume, initial support could be found at $76.15. A further breakdown below this level could expose prices to $74.39 and even $72.39.
Summary
WTI Crude Oil is stuck in neutral territory, with upside potential capped by inflation jitters and a strengthening US dollar. The OPEC+ meeting this weekend will be a key driver, with an extension of production cuts offering the most likely catalyst for a price increase. Technically, a break above $80.55 or below $76.15 will signal the next directional move for WTI Crude Oil.
Sources: TradingView, Trading Economics, Reuters, Dow Jones Newswire, MT Newswire.
Piece written by Mfanafuthi Mhlongo, Trive Financial Market Analyst
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