Crude Oil Week Ahead: US CPI vs Eastern Supply Concerns

Key Events:

IEA Short-Term Energy Outlook (Tuesday)
FOMC Meeting Minutes (Wednesday)
Crude Oil Inventories (Wednesday)
US CPI core, y/y, m/m (Thursday)

US Economic Indicators

Friday’s labor market data reinforced a strong economic outlook:

Pushing the US Dollar Index above 102 and boosting stock market indices towards their record highs
Reducing expectations of a large rate cut to 25 bps
Enhancing expected oil demand alongside improving labor market conditions

This week, FOMC meeting minutes and US CPI data are likely to add volatility to the market, especially with their influence on rate cut expectations. As labor market concerns ease, these events will play a key role in determining oil price trends from a monetary policy perspective.

Middle East Tensions

On the supply side, escalating tensions in the Middle East have shifted away from ceasefire hopes, adding upward pressure on oil prices due to potential supply disruptions. As threats of strikes on oil facilities increase, oil retested the $75/barrel zone last Friday.

Technical Outlook

Crude Oil Week Ahead: 3Day Time Frame – Log Scale

Source: Tradingview

As concerns over the US labor market eased and worries about Eastern oil supply disruptions grew, USOIL saw a positive rebound from the $65 support level, retesting the lower boundary of the year-long consolidation at $75.40. With $76 acting as a significant resistance level, a close above this point could shift overall sentiment towards a more optimistic outlook, targeting potential levels at $77 and $80.

The Relative Strength Index (RSI) is aligned with a resistance level that connects the lower highs from April and July 2024, indicating a potential reversal back to the $70 and $65 levels.

The $65 support remains crucial in defining a neutral or downward scenario for oil. On the upside, a break above $77 would push oil prices toward the $80 mark, potentially leading to further gains towards the highs of 2024.

--- Written by Razan Hilal, CMT – on X: @Rh_waves

The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.

GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.