Crude Oil Prices Rise as UBS Acquistion of Credit Suisse Boosts Market Confidence

Key Takeaways

• Crude oil prices slightly up after last week’s losses.
• Oil market volatility has led to a decline in investment.
• UBS acquisition of Credit Suisse, central bank commitments boost market confidence and crude oil prices.
• Investors call for pause in Fed’s monetary policy tightening to avoid negative impacts.
• Goldman Sachs lowers Brent crude forecasts after recent price drops.

Overview

After experiencing significant losses last week due to banking sector fears, U.S. West Texas Intermediate crude oil futures are slightly higher in early Monday trading.

Despite traditional supply and demand fundamentals not being as bad as currently priced in, the market has been treated as a risky asset due to its volatility, leading to a decline in investment.

However, as of 02:21 GMT, June WTI crude oil futures are trading at $67.73, up $0.61 or 0.01%.

Oil Prices Rally as UBS Buys Credit Suisse and Central Banks Boost Market Confidence

The crude oil market experienced a surge in prices on Monday, following a week of significant losses, as Switzerland’s largest bank, UBS, announced its acquisition of Credit Suisse, the country’s second-largest lender.home

This, combined with commitments from major central banks to support financial markets, helped restore market confidence and stabilize global markets. This renewed confidence has led to a relief rally in risk assets, including crude oil prices, which have been subject to volatility in recent months.

Investors Call for Pause in Fed’s Monetary Policy Tightening as Oil Markets Brace for Potential Impacts

Investors are expecting a possible interest rate hike by the US Federal Reserve on Wednesday, with a 60% probability being priced in, but some executives are calling for a pause in monetary policy tightening to avoid negative impacts.

If the Fed softens its tone on rate hikes, broad markets could continue their relief rally. This could lead to a decline in the US dollar’s value, making dollar-denominated commodities like crude oil more affordable for holders of other currencies. Additionally, Goldman Sachs has lowered its Brent crude forecasts following recent price drops due to banking and recession fears.

Daily June Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. A trade through $65.59 will signal a resumption of the downtrend. A move through $80.97 will change the main trend to up.

The minor trend is also down. A trade through $69.94 will change the minor trend to up. This will shift momentum to the upside.

The minor range is $69.94 to $65.59, making its pivot at $67.77 the first resistance. The second resistance is a long-term 50% level at $68.76.

The major downside target is a long-term Fibonacci level at $61.27.

Daily June Crude Oil Technical Forecast

Trader reaction to $67.77 will determine the direction of the June WTI crude oil market on Monday.

Bearish Scenario

A sustained move under $67.77 will indicate the presence of sellers. The first downside target is $65.59. This is a potential trigger point for an acceleration to the downside with $61.27 the next target.

Bullish Scenario

A sustained move over $67.77 will signal the presence of buyers. The first two targets are $68.76 and $69.94. Taking out this level could create the momentum needed to challenge $71.58 – $73.05.