Crude Oil Slips After Brief Rally As USD Strengthens

Crude oil prices fell after initially gaining over 1.5% on Wednesday, marking the biggest rise in two weeks. Despite concerns about Tropical Storm Francine’s impact on US oil production, traders believe the storm’s effects will be short-lived due to the current oversupply in the market. The US Dollar also strengthened following a surprise rise in inflation data, reducing expectations of a large interest rate cut by the Federal Reserve, which in turn pressured oil prices. Additionally, the International Energy Agency (IEA) reported a slight drop in OPEC production, but Gulf producers maintained steady output. Meanwhile, Venezuela’s crude delivery to India may proceed after approval outside the US embargo.

XBRUSD – H4 Timeframe

Brent on the 4-hour timeframe is currently within the daily timeframe pivot zone, and seems to be showing signs of a reversal. The bullish momentum has recently broken above the trendline resistance, indicating that price may be seeking out the supply zone behind the FVG (Fair-Value-Gap) at the highlighted break of structure, using the trendline resistance as a confluence.

Analyst’s Expectations:

• Direction: Bullish
• Target: $76.50
• Invalidation: $68.03

XTIUSD – H4 Timeframe

When price broke below the previous low on the 4-hour timeframe of XTIUSD, price created a supply zone, backed by a FVG (Fair-Value-Gap), or an imbalance as some would prefer to call it. It is notable to understand that price usually seeks out such price gaps in order to fill them and then rebalance the liquidity. In this case, since price has broke above the initial trendline resistance, it would therefore make sense for price to climb higher, reach for the supply zone at the FVG, before dropping back again – since the moving averages and trendline indicate that Oil might still be bearish overall.

Analyst’s Expectations:

• Direction: Bullish
• Target: $73.00
• Invalidation: $64.20