Crude Oil Prices Steady as Focus Remains on Broader Markets

Key Takeaways

• WTI crude oil prices stabilized during Asian session
• Strong rebound in oil prices unlikely until banking crisis dissipates
• Russian oil production cuts may need to be extended beyond June
• Strong dollar holding back oil prices, while geopolitical tensions provide support

Overview

U.S. West Texas Intermediate crude oil prices stabilized on Monday as investors kept an eye on broader financial markets.

The traditional oil fundamentals remained subdued during the Asian session, but WTI futures are expected to see the most active price action during European and US trading hours with intraday volatility. However, a strong rebound in oil prices is unlikely until the banking crisis dissipates fully, which could take days or weeks.

At 06:31 GMT, June WTI crude oil futures are trading $70.05, up $0.64 or +0.92%. On Friday, the United States Oil Fund ETF (USO) settled at $60.98, down $0.01 or -0.02%.

Oil Prices Stable as Investors Monitor Geopolitical Tensions

The strong dollar held back oil prices as it makes it more expensive for holders of other currencies, but Russian President Vladimir Putin’s comments about stationing tactical nuclear weapons in Belarus increased geopolitical tensions in Europe over Ukraine and provided some support for oil prices.

Russia is close to achieving its target of cutting crude oil production by 500,000 bpd to about 9.5 million bpd, but may need to extend output cuts beyond June to draw down inventories.

The EU embargo is impacting Russian oil product exports more than crude exports, resulting in diesel being stuck on ships waiting for buyers.

Refinery disruptions due to industrial action in France are impacting crude demand and fuel production.

Investors will also be monitoring China’s upcoming manufacturing and services purchasing managers’ indexes (PMIs).

In the US, the number of oil rigs increased for the first time in six weeks, rising by four to 593, while gas rigs remained steady at 162, according to a report from energy services firm Baker Hughes Co.

Daily June WTI Crude Oil Technical Analysis

The main trend is down according to the daily swing chart. However, momentum is trending higher. A trade through $80.97 will change the main trend to up. A move through $64.58 will signal a resumption of the downtrend.

The nearest support is a pair of 50% levels at $68.76 and $68.19. The closest support is a series of retracement levels at $71.08, $73.05 and $74.71.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to $69.41 is likely to determine the direction of the June WTI crude oil market on Monday.

Bullish Scenario

A sustained move over $69.41 will indicate the presence of buyers. This could lead to a labored rally with potential targets lined up at $71.08, $71.79, $73.05 and $74.71.

The market is likely to run into resistance as long as there are lingering banking fears.

Bearish Scenario

A sustained move under $69.40 will signal the presence of sellers. This could trigger a quick break into $68.76 to $68.19.

If $68.19 fails as support then look for the selling to possibly extend into $67.02. This is a potential trigger point for an acceleration to the downside.