Crude oil price recouped some of the losses from late last week as the US dollar eased on its rebounding. Even so, talks over the US debt ceiling and the persistent recession concerns continue to weigh on the asset.
Just like the other dollar-priced assets, crude oil price tends to move inversely to the value of the US dollar. Indeed, the easing of the dollar index on Monday was largely behind the recorded oil price gains.
On the one hand, talks over the US debt ceiling and expectations of a rather dovish Fed in ensuing meetings do not necessarily point to a stronger US dollar. As such, the recent rebounding may be more of a technical correction. If that is the case, crude oil price may continue to find support in the decline of the US dollar.
Even so, concerns over the US debt ceiling and probable recession have been weighing on the oil demand outlook. Investors are keen on when and whether the Democrats and Republicans will reach an agreement on raising the borrowing cap. If not, a default may occur in a few weeks from now; an aspect that could further weigh on crude oil price. In the short term, the market will also be reacting to the Chinese economic data scheduled for Tuesday.
Brent crude oil price prediction
Brent oil began the new week on its front foot after three consecutive sessions in the red. Even so, it remains on the downtrend that has been in place for about a month now. As at the time of writing, the benchmark for global oil was up by 1.43% at 75.22.
A look at its daily chart shows crude oil price trading below the 25 and 50-day EMAs. Indeed, both the fundamentals and technicals signal that the bears are still in control of the market.
In the immediate term, I expect the asset to continue hovering around 75.30 as the market seeks stabilization. With the likely range-bound trading, the support level at 72.50 and the resistance level of 77.85 will be worth watching in the ensuing sessions.