Crude Oil Price Forecast: Brent & WTI Caught Between Supply & US Factors

BRENT/WTI CRUDE OIL FUNDAMENTAL BACKDROP

Crude oil prices (WTI and Brent) have rallied on the improved risk sentiment yesterday following on from relatively positive US debt ceiling negotiations. Despite a stronger U.S. dollar and a massive addition to weekly crude oil stocks via the EIA report, debt ceiling optimism has dominated other variables. From a supply chain perspective, fires in the Alberta region (Canada) have extended their devastation revising supply downward and bolstering crude oil prices.

Looking at the economic calendar today, US data has begun the trading day on the front foot with labor data (see below) significantly beating estimates on all metrics thus reinforcing the tight labor market in the US. The initial impact was a stark rally in the Dollar Index (DXY) resulting in a selloff in crude oil markets. The rest of the day will be dominated by Fed speak providing some short-term volatility for oil.

U.S. ECONOMIC CALENDAR (GMT +02:00)

Source: DailyFX economic calendar

TECHNICAL ANALYSIS

BRENT CRUDE OIL PRICE CHART (DAILY)

Chart prepared by Warren Venketas, IG

Daily Brent crude oil price action is trading within an ascending triangle formation (black) with two unsuccessful attempts by bulls to pierce triangle resistance coinciding with the 77.23 March swing low.