Commodity prices have bounced to start the week, with the oil futures moving higher amid the G-7 summit, where the members considered imposing new sanctions on Russia’s export, though the recession fears loom. But in a longer time period, the oil prices could face further pressure when OPEC + doubles its output increase in July, along with a potential price cap to be taken by the G-7 countries. Plus, the US’s release of the oil reserve could also add to the downside risk of the crude prices.
From a technical perspective, the rebounding tailwind may continue to support the oil prices to move higher in the next 1-2 trading days till the upside momentum exhausts.
Crude oil West Texas (WTI) – Cash, daily, NG (valid for 1-2 trading days)(Click to see the enlarged chart)
The WTI futures had a bullish break out at the 50-day MA, pricing at 111.37, which became imminent support in the daily chart. The upside momentum may take the oil price to hit the next resistance at the range prices between 113.5-114 (Fib. 50.00%), then heading to the 20-day MA, pricing at 116, confluence with the Fib. 61.80%. However, the rebound momentum may be exhausted toward the end of the week by referring to the last two rebounding phases in early April and early May, each of which had only taken 4 trading days.
On the flip side, the WTI price may resume the downtrend if it closes under 111.37 at the 50-day MA, and retest the support at yesterday's open price at 109.14.
Fib. – the Fibonacci retracement connects from the high on 14 July and the low on 22 June.