- Better inflation outlook helps to lift oil prices
- China stimulus could boost demand further
- 200/233-DMA is a potentially big test of resistance above
Oil prices have steadied after a volatile week following the breakout from its two-month range.
The break came on the back of output curbs from Saudi Arabia and Russia, initially, but then better inflation data from the US, eurozone, and UK which could boost economic prospects.
Since then, the price has been volatile but importantly held above previous range highs. The inventory data from EIA on Wednesday triggered some choppiness but was no game-changer, while promises from China’s top economic planner to restore and expand consumption fell on deaf ears a little as they lacked significant detail.
We probably will see more of a rebound in the second half of the year as the first was a little disappointing but we need more than just words. A stronger rebound in China and softer landings elsewhere could be bullish for crude depending on what producers do.
Can the price push above the 200/233-DMA band?
While the price hasn’t pushed on since hitting a three-month high last week, it has held onto those gains and remained above the prior range high, surviving an initial test earlier this week.
BCOUSD Daily
Source – OANDA on Trading View
If the price breaks above last week’s high, the next test could come around $82.50-$84, the 200/233-day simple moving average. It would be the first time in almost a year that it has traded above the SMA band.
Initial potential support below remains around $77-$78 where key Fibonacci retracement levels combine with the prior range high.