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Crude oil price to test 50-Day SMA on break above monthly opening range

The price of oil is on the cusp of testing the monthly high despite a larger-than-expected rise in US inventories, and crude may push towards the 50-Day SMA if it clears the opening range for September.

Source: Bloomberg

Crude oil price to test 50-Day SMA on break above monthly opening range

The price of oil appears to have reversed course ahead of the January low ($74.27) as it extends the advance from the monthly low ($81.20), and crude may stage a larger rebound over the coming days as signs of easing demand encourages the Organization of Petroleum Exporting Countries (OPEC) to scale back on production.

Source: DailyFX

Fresh data prints coming out of the US may influence OPEC as crude inventories increase for the second week, with stockpiles climbing 2.442M in the week ending September 9 versus forecasts for a 0.833M rise.

In response, OPEC may continue to switch gears over the coming months as they revert to their previous output schedule, but expectations for robust demand may keep the group on a preset course as the most recent Monthly Oil Market Report (MOMR) states that “world oil demand for 2022 is expected to rise by 3.1 mb/d, y-o-y unchanged from last month’s report.”

Source: OPEC

The MOMR goes onto say that “in 2023, expectations for healthy global economic growth, combined with anticipated improvements in the containment of COVID-19 in China, are expected to boost oil consumption,” and the projections may push OPEC to provide a steady supply as “the demand outlook for 2023 remains at 2.7 mb/d, unchanged from the last MOMR.”

Source: Energy Information Administration

In turn, the price of oil may stage a larger rebound ahead of the next Ministerial Meeting on October 5 as OPEC retains a positive outlook for crude consumption, and it remains to be seen if the developments coming out of the US will influence the organization as a deeper look at the figures from the Energy Information Administration (EIA) show weekly field production printing at 12,100K for the third consecutive week.

With that said, current market conditions may prop up the price of oil as expectations for robust demand are met with indications of limited supply, and crude may attempt to test the 50-Day SMA ($92.76) if it clears the opening range for September.

Crude oil price daily chart

Source: TradingView

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This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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