Oil Price Fundamental Daily Forecast – Underpinned by Chinese Demand Predictions, Weaker Dollar

Oil prices rose on Monday during the Asian late morning trade as the market received support from a recovery in Chinese demand and a weaker dollar.

However, market sentiment remained fragile due to worries about further monetary tightening by the Fed and high crude oil inventories in the U.S.

Analysts from ANZ Bank noted on Monday morning that market sentiment was affected by these concerns. A weaker greenback makes oil cheaper for holders of other currencies, which provides support to oil prices.

At 08:00 GMT, June WTI crude oil futures are trading $77.14, up $0.34 or +0.44%. The United States Oil Fund finished at $67.14, up $0.90 or +1.36%.

Volatile Session on Friday Amid Risk Concerns

The failure of Silicon Valley Bank and New York-based Signature Bank, and concerns about possible contagion, led to a selloff in U.S. assets at the end of last week.

This selloff also put downward pressure on the dollar. However, positive comments made on Sunday by Saudi Aramco CEO Amin Nasser regarding crude demand from China helped provide support to oil prices. Nasser said that he was “cautiously optimistic in the short to midterm” and that the market will remain tightly balanced.

The announcement that Riyadh and Tehran had agreed to restore diplomatic relations in a China-brokered deal has also had an impact on the market. This deal potentially paves the way for the revival of a nuclear deal that would allow exports of currently-sanctioned Iranian crude.

On Friday, U.S. employment data for February beat expectations, with nonfarm payrolls rising by 311,000 jobs. However, from a medium to long-term supply perspective, energy services firm Baker Hughes Co noted that U.S. energy firms have cut the number of oil and natural gas rigs operating for a fourth week in a row for the first time since July 2020.

Daily June WTI Crude Oil Technical Analysis

The main trend is up according to the daily swing chart. However, momentum is trending lower.

A trade through $80.97 will signal a resumption of the uptrend. A move through $74.17 will change the main trend to down.

The minor trend is down. This is controlling the momentum. A trade through $78.18 will change the minor trend to up.

Minor support is $76.71. Major support is $73.05. Resistance is layered at $77.52, $78.39 and $78.83.

Daily June WTI Crude Oil Technical Forecast

Trader reaction to the Fibonacci level at $76.71 will determine the direction of the June WTI futures contract on Monday.

Bullish Scenario

A sustained move over $76.71 will indicate the presence of buyers. This could lead to the start of a stubborn rally with potential resistance levels coming in at $77.52, $78.29 and $78.83.

Bearish Scenario

A sustained move under $76.71 will signal the presence of sellers. This could trigger a sharp break into $74.96, followed by the main bottom at $74.17.