Crude oil price is set for increased volatility in the new week as investors seek clarity on the supply/demand dynamics from the slated economic events. In addition to talks on the Russia-Ukraine ceasefire, which are scheduled for 15th August, the oil market will be keen on the OPEC monthly report.
The US-China tariff truce and US CPI are also expected to influence crude oil prices with WTI oil experiencing a heavier impact. Both the global and US oil benchmarks have had a seven-day losing streak; finding support at 6-week lows.
Event-packed week to shape crude oil price outlook in the short-term
Crude oil price will likely experience heightened volatility in the new week as investors digest several crucial data and events. Tuesday will particularly be influential to the asset’s price movement.
In addition to developments on the Russia-Ukraine ceasefire, the oil market will be keen on the OPEC monthly report, EIA short-term energy outlook, US CPI data, and the deadline of the US-China tariff truce.
OPEC’s monthly report comes about a week after the organization of petroleum exporting countries and its allies agreed to increase production by 547,000 barrels a day in September. On paper, the group should be pumping an additional 2.5 million bpd in September compared to March. While this has fueled oversupply concerns, some members are struggling to hit their target. As such, the market participants will be looking for clarity in the upcoming OPEC monthly report.
The US CPI and US-China truce will also be key drivers of crude oil price; especially for WTI oil. Late last week, the US Commerce Secretary, Howard Lutnick, hinted at the possibility of a 90-day extension of the US-China tariff truce whose deadline is on 12th August. Such a deal may ease some of the stress on crude oil prices.
Notably, the US dollar curbed last week’s losses at the support zone of $98 ahead of this decision and the US CPI data. As the bets for a Fed rate cut in September increase, the rebounding of the greenback may further weigh on crude oil price. Similar to other dollar-priced assets, a surge in the value of the US dollar makes crude oil more expensive for buyers holding foreign currencies.
Brent crude oil price technical analysis
Brent oil ended the week in the red, dropping below the bullish channel that had shaped its rebound in July. After a seven-day streak of losses, the global benchmark hit its lowest level in about 6 weeks before recovering slightly to end the week at $66.31.
As seen on its daily price chart, Brent crude oil price continues to trade below the short-term 25-day EMA and the medium-term 50-day MA. Notably, the two MAs appear to be converging at $68.72. If the short-term MA remains above the medium-term one, the asset will likely rebound to trade within the range of between $65.90 and $68.06. Indeed, its RSI of 39 points to this possibility.
However, the formation of a bearish death cross, which forms when the short-term EMA crosses the medium-term EMA to the downside, may yield further losses. If that happens, the bears will have a chance to pull the Brent crude oil price lower to $64.50.
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