Crude oil price has eased from the knee-jerk reaction to OPEC+ surprise decision. As has been the case in recent months, macroeconomics has been an influential driver. With the US nonfarm payrolls in focus, signs that the country’s labor market is slowing may boost the commodity as the dollar weakens further.
What’s driving the market?
Crude oil price began the week on a high note following OPEC+ surprise decision to add to its production cuts. Even so, macroeconomics remain a major driver of the oil market. In fact, it is the reason why the asset has eased in recent sessions.
Even with the supply cuts from OPEC+, weak economic data from the US continues to weigh on the demand outlook. Seeing that the country is the leading consumer of crude oil globally, the persistent recession fears have continued to curb crude oil price gains.
On Monday, the released US manufacturing activity data pointed to contraction. Besides, February’s JOLTs job openings dropped below 10 million for the first time in close to two years. Signs of a softening economy and the subsequent recession fears continue to exert pressure on crude oil price.
In the immediate term, the asset may remain range-bound as investors await further cues from the nonfarm payrolls set for release on Friday. Signs of an easing labor market may indicate the Fed’s efforts are working. The subsequent decline in the value of the US dollar may offer some support to oil prices.
WTI crude oil price prediction
On Monday, WTI futures rose by about 8% as the market reacted to the surprise decision by OPEC+. Post the knee-jerk reaction, the asset has been on consolidation mode.
As at the time of writing, the benchmark for US oil was up by 0.01% at 80.31. Following the rebounding observed over the past two weeks, crude oil price is trading along the upper Bollinger band.
In the short term, 82.55 will be a resistance level worth watching. The bulls will need to gather enough momentum to break this resistance to hit a fresh YTD high at 84.04. However, with the ongoing demand/supply imbalance, that level may remain evasive in the short term.
With that, crude oil price will likely remain range bound as it finds support at 77.75. However, as macroeconomic continue to impact the oil demand outlook, a pullback past the range’s lower border may give the bears an opportunity to retest 75.07.