Reduced gains on Wall Street and profit taking puts pressure on oil prices❗
WTI and Brent crude oil are down more than 2% today, breaking a 3-day upward streak. Despite this, this week is likely to close with a strong gain, which will be the third week in a row of gains. Oil has rebounded quite significantly looking at the outlook of recent months.
Moreover, we believe that today's move is not related to fundamentals, but just using high liquidity to take profits. Oil continues to have a number of supportive factors:
Start investing today or test a free demo
Open account Try demo Download mobile app Download mobile app- Continued dollar weakness - EURUSD at 1.1200
- OPEC+ cuts have a real impact on supply reduction
- OPEC revises demand expectations for this year up by 0.1 mbd
- Libya closes half of oil fields due to protests
We are not seeing a resumption of upward movement on the dollar today. The one negative factor for oil this week was the large increase in oil stocks. Nevertheless, looking at the chart, we observe that WTI oil is retreating clearly from testing the 200 session average. We saw a similar downward movement in April, when OPEC+ surprised with its first strong cuts. Now, however, supply is constrained enough in real terms to have an impact on price creation, so we expect the upside to continue in the near term.
Technically, of course, we are reacting to an important resistance. The nearest demand zone for oil is around USD 72.5-73.5 per barrel. However, in order to confirm our thesis of profit taking, it is worth paying attention to declines in gold or also the mixed mood on Wall Street.
Source: xStation5
This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.
