Crude oil will end its second week of gains, and Friday will be at a high level

Oil prices are positive for the second week in a row.
Traders see a positive outlook for U.S. demand in the near term, while stocks fell more than expected last week.
The US Dollar Index remains well above 105.50 with support from the Japanese Yen and Euro.

Oil prices are moving higher after rebounding slightly earlier on Friday and will close in the green for the second week in a row, providing a gain of more than 7% in two weeks. The decline in U.S. inventories, combined with the southern U.S. preparing for the first tropical storms, could mean short-term supply disruptions.

Meanwhile, the US Dollar Index (DXY), which tracks the performance of the US dollar against six major currencies, rose sharply in the higher 105.00 area, approaching 106.00. The move was sparked overnight when Nvidia (NVDA) lost $91 billion in market value in just one trading session, triggering a massive move towards the secure haven Greenback. On Friday, European Purchasing Managers Index (PMI) data signaled that the eurozone economy was losing momentum, ahead of US PMIs due for release tardy Friday.

At the time of writing, crude oil (WTI) was trading at $81.30 and Brent crude was trading at $85.05.

Oil News and Market Drivers: The summer rally is underway

On Thursday, the U.S. Energy Information Administration reported that crude oil inventories fell by more than 2.5 million barrels this week, more than expected, sending crude oil prices rising again above $80.00, Bloomberg reported.
Most oil drilling and export activities have been suspended due to severe weather in the Corpus Christi area of Texas. According to Reuters, Mexico will also close some fuel import terminals.
Reuters reports that Mexican state oil company Pemex will start processing oil at its Dos Bocas refinery in the second half of 2024.
The number of Baker Hughes drilling rigs in the U.S. will begin to raise in importance as hurricane season begins. This week’s number will be published at 17:00 GMT, the previous number was 488.

Technical analysis of crude oil: Further increases ahead

The price of crude oil managed to jump above the key level, reaching $81.00. This is where it will be critical to see if oil can sustain profit-taking and maintain daily and weekly closes above this level. If this happens, there could be a bigger upside towards the 2024 high of $87.12

On the other hand, the red downtrend line near $81.00 has been broken and now needs to prove its resilience as support with both a daily and weekly close above it. More room to rise towards $87.12, the highest level since the beginning of the year (April 5). Previously, a relatively minor key level acted as resistance near $84.00.

On the other hand, a gigantic band of plain moving averages (SMAs) should now act as support and no longer allow for movements below. This means the 55-day SMA of $79.79, 100-day SMA of $79.47, and 200-day SMA of $78.99 should avoid a move below $79.00. If these levels do not hold, another drop to $75 could occur.

US WTI Crude Oil: Daily Chart