Crude oil price began the new week on its back foot even after recording its first weekly gain in over a month. Talks over the US debt ceiling and concerns over Chinese demand have continued to weigh on the asset.
Even so, decline in supplies from OPEC+ and Canada is offering some support for the commodity. Besides, with the US Memorial Day around the corner, the bulls are eyeing the peak summer driving season.
What’s driving the crude oil market?
As has been the case in recent months, events in the two largest economies are major drivers of crude oil price. On the one hand, concerns over oil demand in both the US and China have continued to weigh on the asset.
Recent economic data signalled that China’s recovery from the COVID-19 pandemic may be losing momentum. Figures released a week ago showed that industrial output, fixed investment, and retail sales grew at a slower than expected pace in April. Seeing that China is the leading importer and second largest consumer of crude oil globally, this has added to the asset’s demand concerns.
At the same time, negotiations over the US debt ceiling will likely influence the risk sentiment in the ensuing sessions. That, coupled with the rebounding of the dollar index has been weighing on crude oil price. Even so, decline in supplies from OPEC+ and Canada is offering some support to the asset. Besides, the Memorial Day on 29th May will mark the beginning of the peak summer driving season.
Brent crude oil price forecast
After being on a losing streak, crude oil price recorded its first weekly gain in over a month in the past week. However, it has began the new week on its back foot; trading in the red for the third consecutive session.
A look at its daily chart shows the asset is still trading below the 25 and 50-day EMAs; indicating the bears are still in control. As at the time of writing, Brent futures was at 76.00.
Even with a probable rebounding, crude oil price will likely remain below the psychologically crucial level of 80 for a while longer. In the immediate term, the range between 73.55 and 78.66 will be worth watching. Past the range’s lower border, the bulls will be keen on defending the support at 72.50.