Oil Climbs On Strong Summer Demand, US Inflation Eases

Fundamental Analysis

* Fuel Boom: Crude oil prices have risen due to signs of strong summer demand and lower inflationary pressures in the United States, the world’s largest oil market, boosting investor confidence. U.S. government data showed gasoline demand hit 9.4 million barrels per day (bpd) in the week ending July 5, the highest for this holiday week since 2019. Additionally, jet fuel demand averaged over four weeks was at its highest since January 2020. The decline in U.S. consumer prices in June has also raised optimism that the Federal Reserve might soon cut interest rates. Lower inflation and potential rate cuts are expected to stimulate economic activity and increase oil demand.

Technical Analysis

* Technical Breakout: Crude oil price was traded higher while currently testing the resistance level 82.75. MACD which illustrate bullish bias signal suggest the commodity to further extend its gains after it breaks above the level.

* Resistance and Support: If the bullish momentum persists, there’s a strong likelihood that the price will potentially head towards 84.35 after it breaches and close above the level 82.75. Conversely, a potential correction is also to be expected and the price could head towards 81.40.

Potential Risks

With the US CPI data behind them, investors are now moving ahead to focus on the upcoming U.S. Producer Price Index (PPI) wholesale inflation report, which could potentially disrupt the expectations of those hoping for a rate cut as the data is expected to rise compared to previous month reading.

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Monitoring

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