China retail sales raised 3.5% annually in January and February, while fixed asset investment growth ticked up to 5.5% to avoid the risks of the real estate sector with the bottoming-out signal. However, slower industrial production growth with a 2.4% improvement and slower labor market developments kept the worries alive.
In addition, Eurozone and the United States data could have been more encouraging to make the Oil price U-turn short-lived. The US retail sales in February decreased by -0.4%, more than the -0.3% decline of market expectations. This is while January’s 3% raise was revised to 3.2%. The January data was the most significant increase since March 2021. February data confirmed that the January raise was an exception. Also, we can see the reflection of high inflation and the Federal Reserve’s interest rate hikes.
On the other hand, after Tuesday’s softer consumer inflation numbers, we also had US producer price inflation data on Wednesday. Annual PPI in February recorded 4.6%, slowing down for eight consecutive months and the smallest increase since March 2021. On the monthly scale, with a -0.1% decrease, it was far lower than market expectations and the previous value of 0.3%. Also, the core PPI raised by 4.4% year-on-year, recording 11 consecutive months of slowing growth, lower than market expectations of 5.2%, and the previous month of 5%, the smallest increase since April 2021.
While mentioned data mostly favor the Oil price, according to the New York Fed, the March manufacturing index recorded -24.6, well below market expectations of -8 and the previous value of -5.8. In January this year, the data recorded -32.9, the lowest since May 2020. On top of that, after the Swiss National Bank’s action to support Credit Suisse, concerns about the global economy increased and prevented any severe rebound.
These concerns over economic growth caused the oil price to fall again after a short-lived recovery from a 16-month low. Earlier this week, Iran and Saudi Arabia agreed to re-establish diplomatic relations. Less geopolitical tensions in the Middle East will help to have a more stable energy market.
From a technical point of view, having the RSI around 30 while 20 DMA breaches the 50 DMA confirms the strength of bears, incredibly, as long as it trades under $77. $64.30, and then $62 will be the next target. If the price rises, $74 is the first resistance, and then $77, the uptrend can start with stable trade above $77.