Mar 17, 2023 13:44
On Friday, WTI crude oil shows modest gains near $68.65 as it recovers from its largest weekly loss since early December. In doing so, the energy benchmark justifies price-positive technical details while also drawing cues from the cautious optimism of the market.
Nevertheless, the bullish Doji candlestick formation on the daily chart combines with the oversold RSI (14) line to favor WTI crude oil's rebound from the lowest levels since December 2021. The most recent retreat of the US Dollar as well as prospects of overcoming the concerns of the 2008 financial crisis could bolster the corrective bounce.
It should be noted that the Bloomberg-shared headlines indicating China's gradual economic recovery, along with the discussions indicating a continuation of the Oil supply accord by the major energy producers, favor purchasers of black gold.
However, US President Joe Biden's drive to utilize the Strategic Petroleum Reserve (SPR) and the looming economic recession concerns emanating from US and European banks appear to impact on WTI prices. US Energy Envoy Amos J Hochstein stated earlier in the day that President Biden is committed to replenishing strategic oil reserves.
Notable is that Saudi National Bank's chairman Ammar Al Khudairy's remarks about Credit Suisse's "sound" conditions coincide with major US banks' efforts to assist California-based First Republic Bank in avoiding a liquidity crisis, thereby boosting the risk-on sentiment. Credit Suisse plans to borrow up to 50 billion Swiss francs (CHF) from the Swiss National Bank (SNB) to bolster liquidity, and Reuters cites anonymous sources as saying that US institutions are less susceptible to the Credit Suisse scandal. Moreover, US Treasury Secretary Janet Yellen's assurances regarding the health of the US banking industry and the European Central Bank's (ECB) 50 basis point (bps) rate rise, which was in line with expectations, also boosted sentiment and enabled the most recent increase in the Oil price.
On the contrary, a light calendar and the market's lack of faith in global policymakers' efforts to delay the financial crisis appear to drag on the price of oil.
Ten-year and two-year US Treasury bond yields display a lack of direction while reflecting market sentiment, as yesterday's rebound fails to supplant the two-week downtrend. However, Wall Street closed in the black with benchmark indices gaining more than 1.0%, while S&P 500 Futures remain lackluster as of late.
Moving forward, speculators should keep a watch on the Federal Open Market Committee (FOMC) monetary policy meeting the following week. Prior to that, initial readings of the US Michigan Consumer Sentiment Index for March and the UoM 5-year Consumer Inflation Expectations for the aforementioned month will be crucial for establishing distinct directions.