Oil is on a rampage and is back in the red after the PCE numbers

Oil gives up on previous attempts to avoid losses and falls to the session low.
OPEC+ will meet online to decide on production cuts, with most analysts expecting current cuts to extend into 2025.
The US Dollar Index continues to trade below 105.00 to midway through 104.50.

Oil prices tried to recover, but returned to the lowest level of the session amid an upward trend in US stock markets. However, the minutes after the release of US personal consumption expenditure (PCE) data were bullish with the retreating dollar, stock markets rising and crude oil gaining some time to recover. Just an hour after the start of the US trading session, oil prices have returned to session lows, sending weekly results to losses.

Meanwhile, the US dollar index (DXY) has had a volatile week and is trading just below 105.00. The dollar gained on Wednesday as bond traders raised yields on all banks during some gigantic U.S. Treasury auctions, demanding higher yields on debt issues on offer. But on Thursday, that move was wiped out with both weaker U.S. housing data and the release of gross domestic product data. On Friday, the US Personal Consumption Expenditures (PCE) price index report pushed the dollar lower, more likely to trigger disinflation.

At the time of writing, crude oil (WTI) was trading at $77.35 and Brent crude was trading at $81.60.

Oil news and market drivers: All eyes are now on OPEC

Sunday’s OPEC+ meeting will be an online meeting. Here are some key takeaways ahead of the meeting:
- Iran, Libya and Venezuela are exempt from production cuts because their production is confined by external factors such as sanctions or war.
- According to sources close to the matter, both Bloomberg and Reuters reported plans to maintain production cuts until 2025.
- The United Arab Emirates and Kazakhstan plan to augment production in the near future by launching recent installations and production plants.
Traders continue to highlight the uncertain U.S. economic outlook with unclear monetary policy ahead, while the U.S. housing market shows signs of cooling.
Friday will end with Baker Hughes’ weekly rig count data at 17:00 GMT. The previous number was 497.

Oil Technical Analysis: A Lost Summer for Oil Prices

Oil prices are once again showing their vulnerable side, with investors clearly seeing no confirmation of demand growth any time soon. Over the past two weeks, the Fed has been clear that the chances of an initial rate cut in 2024 are starting to look bleak. There is little OPEC+ can do to counter this, and extending production cuts until 2025 will not be enough to close the deficit between current supply levels and the feeble demand outlook.

First, elementary moving averages (SMAs) need to be regained control. The 100-day SMA of $79.05 and the 200-day SMA of $79.56 are the first levels up. Next, the 55-day Simple Moving Average (SMA) at $81.22 and the falling trendline at $81.75 are an area of high resistance where any recovery momentum could stall. Once you break through this point, the road appears to be quite open and leads to $87.12.

On the other hand, the $76.00 marker is in focus, with the $75.27 level playing a key role if traders still want to be able to move back to $80.00. If the key level of $75.27 falls sharply, expect a full-risk move down that could drop all the way to $68, below $70.00.

US WTI Crude Oil: Daily Chart