Oil Regains $100 Perch on Technical Bounce, Fed-U.S. Econ ‘Silence’
2022.07.18 22:58
By Barani Krishnan
Investing.com — No news seems to be good news for oil bulls.
After weeks of being depressed by threats of super-sized rate hikes that drove crude prices to near five-month lows, longs in oil could flex their muscles again Monday as the market regained its $100-a-barrel perch as the Federal Reserve went into its routine ‘blackout’ period for comments ahead of the July 27 decision on rates.
An unusually light week for U.S. economic data also meant little chance for crude to lose up to $7 a day on fears of a recession.
New York-traded West Texas Intermediate, or WTI, settled up $5.01, or 5.1%, at $102.60 per barrel. WTI lost almost 7% last week, after plumbing to a Feb. 25 low of $90.58 on Thursday.
Brent settled up $5.11, or 5.1%, to $106.27 a barrel. The global crude benchmark slid almost 6% last week, after a near five-month low of $95.42 on Thursday.
The Dollar Index’s sharpest one-day tumble since mid-June was another driver for Monday’s upside. The dollar repeatedly hit two-decade highs over the past fortnight, dealing a severe blow to demand from oil buyers using currency other than the greenback.
All things being equal, a technical rebound lifted crude back to three-digit levels, after a near 10% loss for July at Friday’s close.
Some reports cited concerns over the force majeure on gas delivery issued by Russia’s Gazprom (MCX:GAZP), although that wouldn’t be something that would push oil prices either way on any normal day.
“The gains come after the price reached a low just last Thursday of $90.58,” markets commentator Greg Michalowski said, referring to WTI in a post on the ForexLive forum.
“The 38.2% retracement of the move down from the June 14 high cuts across at $103.19. That is the next upside target on further upside momentum,” Michalowski added.
His call was in line with the initial WTI target of $104.30 for this week called by Sunil Kumar Dixit, chief technical strategist at skcharting.com.
“If WTI manages to break and sustain above $105, the recovery can extend as far as $108.50,” Dixit said. But he also cautioned that failure to breach $105 could resume WTI’s downward correction to $94-$92-$90.
“If it breaks below $90, it will ease the drop to the vertical support of $88-$85-$83,” he added.
