Crude oil prices have reversed some of the losses incurred on Wednesday, as the market reacts to a weakening US dollar. Brent crude oil trades at $81.90 per barrel, a gain of 0.07%, while WTI has gained 0.18% and trades at $78.38 at press time. The US dollar faces headwinds after Wednesday’s release of a lower-than-expected GDP reading for the fourth quarter of 2023. Notably, the market seems to have moved past the higher-than-expected US crude inventories figure.
The dollar trades lower against major currencies during this writing, with the dollar index at 103.86 and down by -0.05%. A weaker dollar boosts the demand for dollar-denominated crude oil, thus boosting prices.
US crude oil stockpiles increased by 4.199 million barrels , beating the projected figure of 3.100 million barrels. This led to a decline in crude oil prices in the hours following the announcement by Energy Information Administration (EIA). However, the commodity has proven its resilience amidst fears of demand declines, and is on an ascending channel on daily price charts. In addition, WTI futures are up by over 2% on the weekly price chart.
However, oil prices could be weighed down by news that China’s factory activity could have contracted in February. Reuters reported early on Thursday that the country’s Purchasing Managers Index (PMI) likely fell to 49.1 in February from January’s 49.2. This could add to the demand-side fears already permeating through the market. However, the official PMI figures will come out later on Thursday, and that could provide fresh impetus.
Technical analysis
The RSI is neutral on the crude oil 30-minute price chart. The pivot price is at 78.95, and as long as WTI stays below this figure, it could be susceptible to breaking below the 77.80 support. Extended bearish momentum at that level will break the support and target the second support at 77.20. However, if the bears lose control at the pivot level, the price could rise to test the resistance at 78.95. Beyond that point, the next resistance will likely be encountered at 80.15.
