This week oil kept rising, while last week also closed higher, with the WTI price closing near $72 per barrel on Friday.
It has been several weeks that Oil prices have been under pressure as mounting economic risks reduce the oil demand outlook; the concern that still there, but at the same time, we are getting closer to summer, which increases the demand. On the other hand, the actions of some OPEC+ members to reduce production and supply raise concerns about the amount of available oil in the market.
Some investors also are worried about the tensions between the government and the Senate in the US over the debt ceiling, but it seems like a political game and should not be such a big deal. Therefore, the ongoing debate around the US debt ceiling cannot cause fundamental economic uncertainty to push oil prices down.
On the monetary policy side, according to the CME Group FedWatch tool, the probability of holding the interest rates at the current level is about 64%, much lower than in previous weeks. However, it is still more likely, which can also support the stock markets and energy demand. As the Federal Reserve has given signals about easing its strict policies, major central banks are also winding down their hiking cycles, which can increase the oil demand outlook.
On the other hand, OPEC+ producers recently decided to reduce output by 1.1 million barrels per day to offset the effects of slower economic growth. This is while after the Memorial Day holiday, which traditionally marks the start of the peak summer demand season in the US, we can expect even more demand in the US as the largest consumer in the world.
Overall fundamental signs are in favor of WTI bulls, which is conform by technical indicators as well. As you can see in the below chart, WTI moves in a clear uptrend with a strong pivot at $71.65. With the current price, we can see the first support at $73. $74.44 and $75.80 are the next resistance that can be the following targets.