Last week, the price of crude Oil continued the bearish trend on Monday, slipping below the $77 level. However, it managed to recover on Tuesday and c
Last week, the price of crude Oil continued the bearish trend on Monday, slipping below the $77 level. However, it managed to recover on Tuesday and continued to rise throughout the rest of the week, except for a drop after the Federal Open Market Committee (FOMC) meeting.
During the FOMC meeting, the Federal Reserve decided to hold interest rates at 5.25%. Although, the FED’s guidance was considered hawkish, which means they indicated a potential inclination towards tightening the monetary policy further. This was surprising given that leading up to the announcement, there were concerns about slowing inflationary pressures, as indicated by the US Consumer Price Index (CPI) and Producer Price Index (PPI) data. Crude Oil ended the day lower on Wednesday, but it resumed the bullish momentum again on Thursday and continued higher on Friday too, sending the price above $71.50.
The FED dot plot, which represents the FOMC members’ interest rate projections, now suggests two more rate hikes for this year. However, according to the price action in the USD last week, the markets might have objections about this, and there might be expectations for just one additional rate hike. Further clarity on the state of the US economy will be needed, and incoming data this week will play an important role in that and for Oi as well.
Nonetheless, Oil prices saw an increase during the week due to optimistic expectations regarding growing demand from China. In May, China’s refinery throughput experienced a significant rise of 15.4%, reaching its second-highest level on record. This increase was attributed to refiners bringing units back online after planned maintenance and independent refiners processing affordable imports.
According to the Kuwait Petroleum Corp, there is an anticipation of continuous growth in Chinese demand throughout the second half of the year. Figures from the National Bureau of Statistics (NBS) indicate that the total refinery throughput in China, the world’s second-largest oil consumer, amounted to 62.0 million metric tons in the previous month. These developments suggest a positive outlook for oil prices, driven by the expected rise in Chinese oil consumption. For the moment Oil is looking positive, although it is facing moving averages above on the daily chart which have been pushing the highs lower, so let’s see when the price gets up there.
WTI
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