. Oil Prices Stabilize as Powell's Senate Testimony Looms: Latest Updates

Oil Prices Stabilize as Powell’s Senate Testimony Looms: Latest Updates

Oil Prices Stabilize as Powell’s Senate Testimony Looms: Latest Updates

21 Jun 2023

Oil maintains its current level before Powell’s Senate testimony.

Key Points

1. British Inflation Defies Predictions, Influences Bank of England Decision

As Federal Reserve Chair Jerome Powell prepares to testify before Congress, oil prices have found stability. Meanwhile, recent data reveals that British inflation has remained resilient, defying expectations of a decline. With inflation holding steady at 8.7% in May, there is an increased likelihood that the Bank of England will implement a hawkish policy decision by raising interest rates by half a percentage point this week.

2. Oil Prices and the Impact of the Strengthened US Dollar

The cost of goods denominated in other currencies is affected by the stronger US dollar, putting downward pressure on oil prices. The current market conditions reflect this negative impact, as US West Texas Intermediate (WTI) crude futures experienced a marginal decrease of 8 cents, equivalent to a 0.11% drop, bringing the price to $71.11 per barrel. Similarly, Brent futures saw a decline of 10 cents, or 0.13%, settling at $75.80 per barrel.

3. Inventory Statistics and Stimulus Measures

Recent analysis indicates that crude stockpiles diminished by an average of almost 400,000 barrels in the week leading up to June 16, contributing to the support of oil prices. The American Petroleum Institute is set to disclose official US oil inventory statistics on Wednesday, followed by the Energy Information Administration on Thursday. Meanwhile, the world’s largest oil importer, China, expects a boost in demand, driven by potential stimulus measures to revive its economy. Furthermore, analysts foresee increased fuel consumption in India’s aviation industry and growing demand in other regions of Asia.

Brent Crude Oil Technical Analysis

Daily Chart Overview

Brent Crude Oil is currently trading within a downward channel, showcasing its market trend. The commodity remains positioned above both the 5-day and 20-day Simple Moving Averages (SMA), indicating positive market sentiment. The Relative Strength Index (RSI) suggests bullishness, while the Stochastic oscillator implies a lack of a clear trend.

Support and Resistance Levels

  • Resistance Level: $75.71
  • Immediate Support Level: $74.57

Trading Strategy for Brent Crude Oil

Following a decline, Brent Crude Oil has entered a consolidation phase, demonstrating limited movement. At present, it is trading near a significant resistance level. If this resistance level is successfully surpassed, it may lead to further upward momentum.

Trade Suggestion:

  • Buy at $75.71
  • Take Profit at $77.72
  • Stop Loss at $74.57

Stay updated on the latest developments in the oil market and make informed trading decisions.