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Dollar Weakness And Positive Economic Data Support Oil

Published 04/16/2021, 06:39 AM
Updated 07/09/2023, 06:32 AM

Crude oil prices bounced and rallied to 4 weeks high on the backdrop of positive economic data and weakness in the US dollar index. US economic data is showing signs of strength in the economy which is supportive of fuel demand.

US weekly initial unemployment claims fell, March retail sales rose and the April Philadelphia Fed business outlook survey index unexpectedly rose. Meanwhile, the IEA on Wednesday boosted its 2021 global oil demand forecast by +230,000 BPD to 5.7 million BPD which is supportive for crude oil prices. Additionally, India's March gasoline demand rose +27% y/y to 88,380 MT per day, the most in 4 months.

However, crude oil prices are likely to find stiff resistance on the backdrop of the rising number of Covid-19 cases global. That is likely to l hurt economic growth and energy demand is negative for crude prices.

On the inventory front,  US crude oil inventories as of Apr. 9 were +1.6% above the seasonal 5-year average, gasoline inventories were -2.4% below the 5-year average, and distillate inventories were +3.4% above the 5-year average. 

Meanwhile, ss per the EIA report, US crude oil production in the week ended Apr. 9 rose +0.9% w/w to 11.0 million BPD and is down by -2.2 million BPD (-16.0%) from the Feb-2020 record-high of 13.1 million BPD.

Crude oil prices are likely to trade firm while above the key support level of 20 days EMA of $61.30 and 50 days EMA of $59.81, it may face stiff resistance around $64.89 and $65.40.

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