US and Chinese economic activities show signs of a slowdown

Crude oil prices rose slightly on Thursday after a sharp drop in the previous sessions due to concerns about the US recession and increased Russian oil exports, which helped mitigate the impact of OPEC's announcement of a production cut, though US crude oil inventories fell more than expected.

Oil prices fell over 4% on Wednesday, despite the fact that US crude oil stocks are tighter than predicted. According to the Energy Information Administration (EIA), US crude inventories fell by 5.1 million barrels for the week ended April 21, up from 4.6 million barrels the previous week and more than the 1.5 million barrels expected, bringing crude oil prices to near one-month lows and wiping out all profits made by the previous OPEC announcement.

In March, the United States' manufacturing and industrial sectors saw a larger-than-expected dip in durable goods shipments and new orders. This suggests that slow business expenditure would likely drag on US economic growth in the first quarter.

Additionally, as a result of rising worry, US consumer confidence hit a nine-month low in April, raising the possibility that the economy may contract this year.

China's GDP increased 4.5 percent year on year in the first three months of the year, above market expectations and deemed the year's greatest growth. However, the economy is still facing mounting debt problems, with unemployment standing at 5.3% in March. The unemployment rate, particularly among young graduates aged 16-24, is close to a record high of 19.6%.

Furthermore, although industrial company profits in China declined only marginally in January-March, profits are still down to 21.4%. Industrial profits fell 19.2% in March alone, as the factory sector struggled to fully recover and from declining profits in the automotive industry in the midst of a price war in the electric vehicle sector, as well as from weak global growth prospects, despite China's exports rising sharply in March and the service and travel sectors rebounding rapidly.

As imports of cheaper Russian oil rose, India's share of OPEC oil imports declined at the quickest rate in 2022/23 to a 22-year low. China, on the other hand, has expanded its purchases of Russian Ural oil. As a result, oil shipments from Russia's western ports reached 2.4 million bpd in April, the highest level since 2019, despite Russia's prior vow to reduce output.

Furthermore, the US dollar's strength amid uncertainties about US monetary policy and first-quarter GDP growth of 1.1%, down from 2.6% the previous quarter, knocked on crude oil prices this week. The market anticipates that the Fed will raise interest rates by another 25 basis points for the final time next week. As a result, investors are concerned about central banks around the world raising interest rates to combat inflation, which might hinder economic development and cut energy demand in the US, UK, and EU. The price of crude oil during this period is therefore likely to remain stable to some extent and decline if the PCE price index, which is scheduled to be announced on Friday, falls or meets forecasts.

Data for Technical Analysis (5H)

Resistance : 78.35, 78.40, 78.46

Support : 78.23, 78.18, 78.12                      

5H Outlook

1H Outlook

Source: Investing.com                     

Buy/Long 1 If the support at the price range 78.18 - 78.23 is touched, but the support at 78.23 cannot be broken, the TP may be set around 78.38 and the SL around 78.15, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 78.35 - 78.40, TP may be set around 78.50 and SL around 78.20, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 78.35 - 78.40 is touched, but the resistance at 78.35 cannot be broken, the TP may be set around 78.21 and the SL around 78.43, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 78.18 - 78.23, TP may be set around 78.09 and SL around 78.38, or up to the risk appetite.       

Pivot Points Apr 28, 2023 01:49AM GMT

Sources: Investing 1, Investing 2