Oil bulls cautious ahead of OPEC, EIA report, U.S. February CPI

2023-03-13 17:59:11

WTI crude remains capped near $77.00 as bulls struggled to cheer broad risk-on sentiment and dollar weakness early on Monday. Even so, crude was defending the previous day's rally from short-term support ahead of monthly oil market reports from the U.S. Energy Information Administration (EIA) and the Organization of the Petroleum Exporting Countries (OPEC).

Commodity prices initially fell to two-week lows before recovering to $74.90 as the dollar slipped despite witnessing a better-than-expected non-farm payrolls report.

Institutional surveys showed that non-farm payrolls increased by 311,000 jobs in February, far exceeding the 205,000 jobs forecast by economists. Average hourly earnings rose 0.2 percent last month after rising 0.3 percent in January, with most industries slowing. The unemployment rate rose to 3.6% from 3.4% in January. The U.S. economy added a large number of jobs in February, but wage growth slowed month-on-month and the unemployment rate rose, pointing to some loosening in the labor market and prompting financial markets to dial back expectations for a 50 basis point rate hike by the Federal Reserve this month.

It should be noted that concerns over events at Silicon Valley Bank (SVB) and Signature Bank swamped U.S. Treasury yields and the dollar on Friday.

However, the U.S. Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint action over the weekend to contain the risk. Reacting to the actions of U.S. regulators, U.S. President Joe Biden said: "The American people and American businesses can trust that their bank deposits will be there when they need them."

Even so, concerns that SVB and Signature Bank signaled a fragile state for U.S. banks pushed back hopes of more rate hikes from the U.S. Federal Reserve and hit U.S. Treasury yields despite risks early on Monday. Rising emotions.

With this in mind, Goldman Sachs expects a rate hike in March, while Fed funds futures also trimmed earlier optimism in favor of a 0.50% rate hike by the Fed in March.

Elsewhere, Chinese President Xi Jinping said earlier on Monday that it is necessary to resolutely oppose interference by external forces to split Taiwan. It also raised concerns that China and the United States will reduce energy demand amid a lack of activity caused by geopolitical tensions.

Against this backdrop, S&P 500 futures rallied from 2.5-month lows and were up nearly 1.60% at press time around 3,960, while U.S. Treasury yields were up amid fresh challenges to hawkish Fed bets , reversing an early rebound from monthly lows.

On the supply side, Iran and Saudi Arabia agreed on Friday to rebuild relations, ending seven years of hostility. The hostility poses a threat to stability and security in the Gulf region and fuels conflict in the Middle East from Yemen to Syria; investors are closely watching export cuts from Russia, which decided in March to cut oil production by 500,000 bpd .

Looking ahead, Tuesday's U.S. Consumer Price Index (CPI) for February will guide the market's immediate moves. Subsequently, March retail sales and the preliminary Michigan consumer sentiment index, due on Wednesday and Friday, will be key for WTI crude oil traders to watch for a clear direction.

On top of that, monthly energy market reports from OPEC and EIA are very important to WTI crude oil traders.

CME Group's latest crude oil trading data

The latest data from the CME Group crude oil futures market showed traders increased their open interest for the fourth straight day on Friday, this time by about 1,500 contracts. Instead, volume remained choppy, down nearly 19,000 contracts.

Last Friday, WTI crude oil prices returned to a smiling face, ending a three-day losing streak. The rise in open interest amid the rebound in oil prices opens the door for oil prices to continue the trend in the short term, with short-term resistance at the $80 mark.


WTI Oil Price Technical Analysis

While a support line from five weeks ago limited downside for WTI around $75.00, a daily close above resistance at the 50-day moving average around $77.75 became necessary for crude oil bulls to stay in the driver's seat.


JRFX shares news information and professional technical analysis on foreign exchange, gold and crude oil every trading day. Follow us so as not to miss the market focus of the day and grasp the trading market in time.

JRFX reminds you: the market is risky, and investment needs to be cautious. This article does not constitute personal investment advice. Please choose corresponding investment products according to your own financial and risk tolerance, and do a good job in corresponding risk control.

About JRFX

· 12 years of financial market experience, the choice of more than 4 million customers, one of the most respected foreign exchange brokers in the world

· Provide 50+ trading products, including foreign exchange, gold, crude oil, stocks, indices, cryptocurrencies, etc.

· Three trading accounts to meet the investment needs of different customers

· Zero commission, low spread, leverage up to 1:1000

· You can open an account with a minimum deposit of 100 US dollars only

· 24-hour customer service


Online Service Create Account MyJRFX Download
Online Service