OIL WEEKLY ANALYSIS – OIL MARKET RECOVERY STALLED BY UNCERTAINTIES AND GEOPOLITICAL TUSSLE

OIL
WEEKLY ANALYSIS – OIL MARKET RECOVERY STALLED BY UNCERTAINTIES AND
GEOPOLITICAL TUSSLE

With June right at the corner, and this month
staging 87% recovering in the black gold market, prices have unfortunately
found a strong level at the $34 handle. The WTI index has struggled to cheer
the USD’s weakness and is currently trading in red in the Asian session with a
correction of 1.5% from the Thursday session. Investors’ sentiment is dampened
amid heightening uncertainties with the current situation in Asia with the
latest signal from the US of a possible change in its long-standing policy
towards China and its internal affair within Hong Kong.

Technically speaking, the price action had a
seesawing week, consolidating between $30 and $34 handle. Although trading
above the smaller EMA 18 & 50, MACD is finally showing diminished bullish
momentum, turning a bit sour with the intention to form a sell signal. RSI
condition is moving far from its overbought level. Investors should consider
further movement in the price action before placing their bets.

Any unexpected situation can quickly tarnish
the positive momentum in the market. Yesterday’s report about the massive
buildup in the US crude inventories where the levels rose to 7.9 M barrels from
a forecast of -2.5 M, instead of dropping the price, actually gave additional
support to the market. It does not look right; the continued appearance of
positive momentum and this rebalance faster than expected might be more
artificial than real. However, by June is expected a 4 Mb/d increase in demand
and cuts in the supply of about 12 MB/d could bring the market into balance.