Crude oil prices still under pressure

Most recently, crude oil prices rose 2% on Tuesday as investors anticipate China to release figures showing crude oil demand to increase due to the lifting of COVID-19 restrictions. Months ago, prices remained constrained by US interest rate hike concerns as economic data indicated service inflation remained high in January, resulting in an overall price of Brent that was down around 0.7% in February while WTI was down nearly 2.5%.

Crude oil futures have therefore moved higher in hopes that economic data, such as PMI for China and the US, that will be released this week will indicate the recovery of the Chinese economy, which imports the most of crude oil. An improvement is expected in February from the previous month due to the expansion in the country's manufacturing sector after the relaxation of COVID measures at the beginning of the year. However, from various economic data of China, most of the country's manufacturing sector is expected to continue to contract, indicating that the economic recovery may not happen as quickly as expected.

The US PMI is scheduled to be announced this week, and it is predicted to reveal that manufacturing activity remains in the contraction territory until February, despite recent significant growth in the service sector. Also, as the country's oil supply surplus is factored in, investors are concerned about a downturn in the world's top oil consumer, which has been undermining oil prices in recent weeks.

Raising US interest rates is expected to have an impact on economic activity later this year, potentially reducing global demand for crude oil. Despite the fact that China's economy is improving and global crude oil supply may tighten as Russia cuts production in response to Western price ceilings.

In addition to the PMI data due out this week, the market will be watching US crude inventories data from the API (American Petroleum Institute) at the end of the session, which is expected to rise by 6.203 million barrels for the week ending Feb. 24. According to the most recent Reuters poll, OPEC produced 28.97 million barrels per day (bpd) of crude oil in February, up 150,000 bpd from January but still down more than 700,000 bpd from September.

Also, according to a source, the US Biden administration is expected to expand sales of higher ethanol-containing gasoline in some Midwestern states at the request of governors; this is expected to take effect in the summer of 2024.

Data for Technical Analysis (5H)

Resistance :83.73, 83.90, 84.17

Support :83.19, 83.02, 82.75

5H Outlook

Source: Investing.com

Buy/Long 1 If the support at the price range 83.09 - 83.19 is touched, but the support at 83.19 cannot be broken, the TP may be set around 83.80 and the SL around 83.04, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 83.73 - 83.83, TP may be set around 84.05 and SL around 83.19, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 83.73 - 83.83 is touched, but the resistance at 83.73 cannot be broken, the TP may be set around 83.19 and the SL around 83.88, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 83.09 - 83.19, TP may be set around 82.85 and SL around 83.85, or up to the risk appetite.       

Pivot Points Mar 01, 2023 03:34AM GMT

Sources: Investing 1, Investing 2