- Oil prices are slightly lower on Monday despite the weakness of the US dollar and the strength of global equity markets.
- WTI remains within recent ranges, near $110, as traders weigh developments on China’s Covid-19 and the EU’s Russian oil embargo, as well as demand.
oil prices stabilized within recent ranges on Monday, amid a fairly quiet start to the week in terms of relevant crude news, with benchmark indices generally not benefiting from the rally in global equities and the fall of the US dollar. As a risk-sensitive asset, strong equities tend to help oil prices, while a weaker dollar increases demand for dollar-denominated commodities (such as oil) as it makes them cheaper for dollar holders. the international currency.
WTI futures of the first month they last pivoted on either side of the $110 level, midway between last week’s highs in the $115 zone and lows in the $105 zone. Currently trading near $109.50, WTI is down $1.0 on the day, which is a small intraday move by WTI standards. Oil traders remain focused on familiar topics such as the Covid-19 lockdown situation in China. According to China’s NHC, the overall situation in the country is improving, although Beijing reported a record number of infections on Sunday. Shutdowns in many of the country’s biggest cities, including Shanghai and Beijing, have dampened Chinese demand for crude in recent weeks, giving crude prices a boost.
On the other hand, analysts also pointed to the strength of the US gasoline market, as peak driving season approaches, reflected in rising US refinery output, as a support for crude oil prices on Monday. According to Reuters analysts, peak US driving season lasts from the end of May (Memorial Day weekend) to September (Labor Day).
While there have been fears that rising gasoline prices since the 2021 peak driving season could dent this year’s demand, analysts have cited high-frequency US mobility data in recent weeks. .which show that until now this has not been the case. A report from the Federal Highway Agency showed last week that vehicle kilometers traveled hit a record high in April this year, and high-frequency data from TomTom and Google show an increase in traffic in recent weeks.
Looking ahead, analysts will continue to watch headlines about whether the EU is getting closer to a deal to end Russian oil imports. The latest reports from Bloomberg suggest that is not the case. This could be a new obstacle for WTI to go back above $115 last week. For now, however, strong demand (outside China) and weak supply (as output from Russia and smaller OPEC countries suffer) should keep prices above weekly lows. past $105, with the 21 and 50 day moving averages at $100.50 also providing support.
Technical levels
Source: Fx Street
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