Oil Price Forecast: Investors Await Powell’s Testimony, EIA Inventory Data for Insight

Highlights

• Oil prices rebound on hawkish Fed expectations and potential crude stock draws.
• Investors eagerly await Powell’s testimony and U.S. oil inventory data.
• Concerns over oil demand recovery in China are countered by stimulus measures.

Overview

WTI Oil prices rebounded on Wednesday, recovering from two consecutive sessions of losses. The market was driven by expectations of hawkish comments from U.S. Federal Reserve Chair Jerome Powell during his congressional testimony later in the day.

Additionally, the possibility of U.S. crude stock draws provided further support to prices. Analysts estimated a potential decline of around 400,000 barrels in crude stockpiles for the week ending June 16. However, concerns over the recovery of oil demand in China, the world’s largest oil importer, capped the gains.

Powell Testimony on Tap

Investors eagerly await Powell’s testimony, expecting to get some insights into future interest rate movements in the U.S., the world’s biggest economy. Federal Reserve policymakers and a nominated economist recently emphasized the focus on tackling high inflation to achieve sustainable economic growth, which could positively impact oil demand.

Traders Looking for Inventory Drawdown

The American Petroleum Institute (API) will release a report on U.S. oil inventories on Wednesday, while the Energy Information Administration (EIA) will release their report on Thursday. These reports were delayed by a day due to the Juneteenth public holiday on Monday. Oil prices could receive additional support if there is a potential drawdown in crude stocks.

China Demand Concerns Linger

While concerns about the demand recovery in China persist, the country has implemented stimulus measures aimed at reviving its economy. China recently cut its benchmark loan prime rates for the first time in 10 months, albeit with a smaller-than-expected reduction. This move comes as economic data indicates challenges in sustaining the earlier momentum seen in the country’s retail and factory sectors.

Short-Term Outlook: Cautious

In conclusion, oil prices experienced a rebound on Wednesday, driven by expectations of a hawkish stance from the Federal Reserve and the possibility of U.S. crude stock draws. However, concerns remain regarding the demand recovery in China. Investors are closely monitoring Powell’s congressional testimony and eagerly awaiting data on U.S. oil inventories. These factors, along with China’s stimulus measures, will likely shape short-term price movements in the oil market.

Technical Analysis

The WTI Crude Oil market is showing signs of bullish sentiment based on the analysis of technical indicators. The current price of 71.44 is slightly higher than the previous close, indicating a positive relationship.

It is also trading above both the 200-4H and 50-4H moving averages, suggesting positive momentum. The 14-4H RSI is in the neutral range, reflecting moderate buying pressure.

Furthermore, the price is above the main and minor support areas, indicating strength in the market. Overall, these factors point to a bullish outlook for the WTI Crude Oil market.