Oil prices rose on Thursday, ignoring the build-up in US stockpiles. Benchmark West Texas Intermediate (WTI) was up by 0.8 percent to trade at $77.60 per barrel, while Brent Crude climbed up 0.3 percent to $80.25 at 11.00 UTC. The market also ignored soft data from China, which signaled that the world’s second-largest economy still faces downward pressure.
US crude oil inventories rose unexpectedly by 1.357 million barrels, exceeding the forecast decline of 1.9 million barrels for the week ending August 7. However, the demand-side concerns caused by the figures were offset by positive growth data by Japan’s economy and US inflation figures. Japan’s economy grew by 0.8 percent in the second quarter of the year, beating the forecast figure of 0.6 percent. Meanwhile, US CPI stayed on the descending trajectory, affirming expectations of the first cut in September. That has raised investor expectations that the recent recessionary pressures will ease, boosting oil’s demand-side outlook.
Also, a weak US dollar provides support for further gains by oil. The greenback has lost ground against major currencies in recent days, with the DXY index near 5-month lows at 102.56 as of this writing. Dollar-denominated crude oil typically records increased demand when the dollar depreciates.
The 2-hour Brent crude oil price chart shows us that the upside is gaining momentum. The price is has just crossed above the Volume Weighted Moving Average indicator line, which corresponds to $80.49. Therefore, the upside will likely continue if the buyers keep the price above $80.50. Also, the RSI is at 51, affirming control by the buyers.
The buyers will likely stay in control above the 80.30 pivot mark, with the first resistance likely to come at 80.53. However, if they extend their control, they could strengthen the upside momentum further to take Brent price to test 80.80. On the other hand, the sellers could take control if the price breaks below 80.30. That could establish the first support at 80.05, but extended control could breach that mark and render the upside narrative invalid. Also, it could send the price lower to test 79.85.
This post was last modified on Aug 15, 2024, 13:09 BST 13:09