The markets await oil inventory data
Small increases in crude oil inventories are expected
Notable increases in oil prices have reached levels of $72.00
Powell stated that the central bank's goal is to rein in inflation
Major support levels for oil are around $67.00
Economic events affecting oil
After declining since the beginning of the week, oil experienced a notable increase in trading yesterday, rising by more than two percentage points, despite continued caution ahead of further signals on the path of US monetary policy. In this context, market attention is focused on the second day of US Federal Reserve Chairman Jerome Powell's testimony before Congress.
During the first day of testimony, the Fed chairman confirmed that the central bank's goal is to rein in inflation and stated that further monetary tightening may be approved in the future to make additional progress in reducing inflation. Powell also added that the interest rate hike last week was likely just a short rest period and not a signal that the Fed will stop.
On the other hand, the People's Bank of China decided earlier to cut interest rates by 10 basis points, bringing the final interest rate to 3.55%. This caused investor morale to rise regarding improving demand in the world's largest oil importer, where markets expect more stimulus measures from Beijing as it struggles to support economic recovery this year.
Currently, the markets are eagerly awaiting the official inventory data from the US Energy Information Administration, with expectations of a small increase in crude oil inventories. In terms of trading, West Texas Intermediate crude oil began the day with a slight decline, trading near $71 per barrel.
The important technical and pivotal levels that may affect the movement of oil
Oil is currently moving within a wide sideways channel, bounded by the support level of $67.00 (representing the lower limit) and the resistance level of $74.50 (representing the upper limit). If oil manages to maintain the support level of $70.00, there is a likelihood of a rebound and a rise towards testing the level of $72.60. A successful break above this level could potentially extend the upward movement to test the stronger resistance around $74.50.
In the event that oil surpasses the significant resistance level of $74.50, it may contribute to further upward momentum, with potential tests of $76.70. If this level is also surpassed, the rise could extend towards the level of $79.25. Conversely, if oil falls and breaks below the support level of $70.00, it could lead to increased downward pressure, causing oil to test the lower limit of the sideways channel around the support level of $67.00.