Crude Oil Price Reversal Takes Shape Ahead Of February Low

(MENAFN- DailyFX) Crude Oil Price Talking Points

The price of oil trades near the weekly high ($92.65) despite a larger-than-expected rise in US inventories, and crude may continue to retrace the decline from earlier the start of the month as it reverses course ahead of the February low ($86.55).

The price of oil defends the opening range for August as it holds above the weekly low ($87.22), and crude may attempt to push back above the 200-Day SMA ($94.77) as it seems to be unfazed by the ongoing rise in US inventories.

However, the data print may influence the Organization of Petroleum Exporting Countries (OPEC) as crude stockpiles increase 5.458M in the week ending August 5 versus forecasts for a 0.073M rise, and indications of slowing consumption may push the group to adjust its output schedule as they plan to boost production by“0.1 mb/d for the month of September 2022.”

As a result, the price of oil may face headwinds over the remainder of the year as indications of easing demand are met with higher supply, and it remains to be seen if OPEC will adjust its approach at the next Ministerial Meeting onSeptember 5 as US production approaches pre-pandemic levels.

A deeper look at the figures from the Energy Information Administration (EIA) show weekly field production climbing to 12,200K in the week ending August 5 from 12,100K the week prior, and a further rise in US output may undermine the recent rebound in the price of oil as it trades below the 200-Day SMA ($94.77) for the first time this year.

With that said, developments coming out of the US may push OPEC to adjust its production schedule amid the ongoing rise in crude output, but the price of oil may stage a larger recovery over the coming days as it reverses course ahead of the February low ($86.55).

Source: Trading View

• The price of oil seems to have found support ahead of the former-resistance zone around the October 2021 high ($85.41) as it reverses course ahead of the February low ($86.55), with the failed attempts to close below $88.10 (23.6% expansion) pushing crude back above the $90.60 (100% expansion) to $91.60 (100% expansion) region.
• Crude may test the Fibonacci overlap around $93.50 (61.8% retracement) to $95.30 (23.6% expansion) as it defends the opening range for August, with a move above the 200-Day SMA ($94.77) bringing the monthly high ($98.65) on the radar.
• Next area of interest comes in around $100.20 (38.2% expansion), with a break/close above $104.20 (50% expansion) opening up the $108.00 (161.8% expansion) to $108.10 (61.8% expansion) region.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

MENAFN10082022000076011015ID1104680223

Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.