Oil price rebounds on weak dollar
Oil prices started the week on a positive note with an aim to erase some of the losses from last week. While the dollar dominated the markets the previous week, oil demand was marred by resurgence of the Covid-19 with the new strain (Delta Variant) slowing down global economic activities.
Crude price on Monday was able to rebound from $65 for the Brent crude and $61 for West Texas Intermediate (WTI) as the dollar slipped after hitting a nine-month high. Scanning through the economic calendar this week, crude oil inventories data is set to be released as oil stockpiles accumulate on weak demand. With the current economic situation still being a determinant on global oil prices, traders will keep tabs on the Jackson Hole Economic symposium where Fed chair, Jerome Powell will be giving insights when the Fed’s will commence with tapering its asset purchase programme. This event is expected to have a major impact on the dollar which could likely affect oil prices as they are inversely correlated.
Technical Outlook of Crude oil
UKOIL Chart Daily time frame
From our previous post, the support level around $65 price level has attracted buying interest as the dollar stumbled. With price already lodged at the near-term resistance around $68, influx of sellers will revive bearish sentiments. In a failed attempt to tame the current bull run, the next resistance will be around $71.
Oil prices are hitting the dollar?
While Oil prices have taken advantage of the dollar, one currency that has benefitted is the Canadian Dollar. The currency which is highly affected by the oil price fluctuations has strengthened against the US dollar as a result of rising oil prices. After sliding further for two months straight against the US dollar, Friday’s event will reveal if the Canadian dollar will sustain its current bullish run.
Adegbotolu Kehinde Erastus – Market and Research Analyst
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