Crude oil price slide from the 10-week high hit late last week as weak Chinese data heightened uncertainties over the commodity’s demand outlook. Even so, a weaker US dollar continues to support the asset.
What’s driving the market?
Crude oil price has been on a rebound for about two weeks amid an improved demand outlook. However, weak Chinese data on Monday dented the optimism over oil demand rebounding.
China’s GDP grew by 6.3% YoY in Q2’23; missing analysts’ forecast of 7.3%. Weak demand both locally and abroad has contributed to the lower-than-expected figures. In turn, investors are concerned over crude oil demand from the leading importer of the commodity as well as the overall health of the Chinese economy.
The weakening of the US dollar is also at play in crude oil price movements. Similar to other dollar-priced assets, a weaker greenback makes crude oil less expensive for buyers with foreign currencies. While it has been on consolidation mode for two consecutive sessions, the currency is close to the over one-year low it hit earlier on Friday. Over a span of two weeks, the dollar index has dropped by over 3%.
Brent crude oil price prediction
Brent crude oil price began the new week on its back foot after recording three straight weeks of gains. Mid last week, it rallied past the psychologically crucial zone of 80 per barrel for the first time in two and a half weeks. On Monday, it dropped below the aforementioned level to 78.38 as at the time of writing.
Even so, it’s still in good shape to report the fourth week of gains. Over the past two weeks, the benchmark for global oil has risen by close to 10%.
A look at its daily chart further shows the bulls still have an opportunity to boost the asset’s price higher. In particular, the 25 and 50-day EMAs are converging at around 76.82. The subsequent formation of a bullish golden cross pattern hints at additional gains.
In the ensuing sessions, the bulls will be striving to break the resistance at 82.80. At the moment, they are keen on defending the support at 78.75. If crude oil price moves below this level, the point of convergence at 76.82 will be a support zone worth watching.