- The price of oil recovers slightly after the vote in the House of Representatives on the bill to increase the debt ceiling on Wednesday night.
- The gains are capped by higher-than-expected API inventory levels, suggesting ample supply.
- Several Fed officials point to a “pause” at the June meeting, even though the top rate could be higher.
Oil is trading sideways above $67.50 (Brent below $72.50) on Thursday, after recovering slightly from the $67 hit the day before, when sellers dominated the market. The rebound came after the bill to increase the US debt ceiling was voted successfully in the House of Representatives late on Wednesday afternoon. The price of oil gained further support after several US Federal Reserve (Fed) officials said they thought interest rates should stay as they are at the next Fed meeting. However, these gains They were constrained by data from the American Petroleum Institute (API), which showed a higher-than-expected increase in Oil inventories, indicating ample supply.
Oil news and movements in the markets
- Oil is recovering from a deep midweek slide after US lawmakers approved the debt ceiling extension deal, easing investor fears that a rogue faction could derail progress on the legislation.
- The drama now moves to the Senate, where a final vote on the deal is expected before the end of Friday.
- Uncertainty over whether the Fed will raise or hold the rate at the June 14 meeting tilted towards the hold option on Wednesday, after the Fed’s Philip Jefferson said a pause before further hikes later could lead to time for the economy to digest the current tightening and avoid tensions in the banking system.
- Expectations of a pause will weigh on the dollar, which is bullish for the oil price.
- Jefferson’s view of a “pause” in June was endorsed by Philadelphia Fed President Patrick Harker.
- Cleveland Fed President Loretta Mester, however, said she saw no “compelling” reason to pause, in an interview with the Financial Times on Wednesday.
- CME’s FedWatch tool, which provides a market view of the probability of future rate hikes, has gone from previously showing favorable odds for a 0.25% hike in June to a greater than 60% probability that the Fed will keep rates unchanged.
- Two of the largest OPEC+ members, Russia and Saudi Arabia, appear to be at odds over politics ahead of the upcoming OPEC meeting on June 4.
- According to sources in Riyadh, the Saudis are unhappy with the way in which Russia allegedly ignores the quota cuts agreed at the October meeting.
- Although no official data on Russian production is available, the shipment data seems to corroborate the charge that they could have increased their oil exports despite the OPEC+ cut agreement.
- Last week, representatives of both countries sent mixed messages about the possible trajectory of the next OPEC+ meeting.
- Saudi Oil Minister Prince Abdulaziz bin Salman appeared to hint that OPEC+ might cut production quotas when he warned speculators (interpreted as short sellers) to “be careful” and expressed support for the OPEC decision. OPEC October cut supply.
- On the other hand, Russian Energy Minister Alexander Novak played down the idea of production cuts, saying: “I don’t think there will be any new measures, because just a month ago certain decisions were made about the voluntary reduction of production of oil by some countries.”
Crude Oil Technical Analysis: Prices Bounce Off 200-Week SMA Support
The WTI oil price continues to decline as the long-term downtrend extends. Keeping in mind the old saying that the trend is your friend, this favors short sellers over long ones. WTI Oil is trading below all the major daily and weekly Simple Moving Averages (SMAs), but has found support at the 200-week SMA at $66.90, from where it is recovering intraday.
US WTI Crude Oil: Weekly Chart
Oil price has decisively broken below the May 22 lows at $70.65, as well as the May 15 lows at $69.40. Only the 200-week SMA stands in the way of further losses. If it breaks below as well, it could weaken further to the year-to-date lows of $64.31.
US Crude Oil WTI: Daily Chart
A break below the year-to-date lows would reignite the downtrend, with the next target around $62.00, where the 2021 lows would come into play, followed by support at $57.50.
Oil needs to break above the May 24 high of $74.70 again to cast doubt on the prevailing downtrend.
This break could lead to a potential target at $79.70, which roughly coincides with the 200-day SMA and the main trend line of the bear market, adding to its importance as a key resistance level.
The long hammer candlestick pattern that formed at the lows of May 4 (and the previous year) is a sign that the price of oil may have formed a strategic bottom at that level.
WTI Oil FAQ
What is WTI oil?
WTI oil is a type of crude oil that is sold on international markets. WTI stands for West Texas Intermediate, one of the three main types, including Brent and Dubai crude. WTI is also known as “light” and “sweet” because of its relatively low gravity and sulfur content, respectively. It is considered a high quality oil that is easily refined. It is sourced in the United States and distributed through the Cushing hub, considered “the pipeline junction of the world.” It is a reference for the Oil market and the WTI price is frequently quoted in the media.
What factors determine the price of WTI oil?
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, Global Growth can be a driver of increased demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter supply and affect prices. The decisions of OPEC, a group of large oil-producing countries, is another key factor in prices. The value of the US dollar influences the price of WTI crude oil, as oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
How do inventories influence the price of WTI oil?
The weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data shows a decline in inventories, it may indicate an increase in demand, which would drive up the price of oil. An increase in stocks may reflect an increase in supply, which lowers prices. The API report is released every Tuesday and the EIA report the following day. Their results are usually similar, with a 1% drop between them 75% of the time. The EIA data is considered more reliable, since it is a government agency.
How does OPEC influence the price of WTI oil?
OPEC (Organization of the Petroleum Exporting Countries) is a group of 13 oil-producing nations that collectively decide member countries’ production quotas at biannual meetings. Their decisions often influence WTI oil prices. When OPEC decides to cut quotas, it can restrict supply and drive up oil prices. When OPEC increases production, the opposite effect occurs. OPEC+ is an extended group that includes ten other non-OPEC member countries, among which Russia stands out.
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.