Crude Testing Resistance

Crude oil prices are continuing to push higher across the European morning on Tuesday. Crude futures are on course for their third consecutive positive day so far, now up around 8% from last week’s lows. The market continues to be buoyed by expectations for a large new Chinese fiscal stimulus package on the back of the PBoC cutting rates last week for the first time in almost a year.

China Outlook in Focus

Concerns around the health of Chinese economy have been a key headwind for oil prices recently. With the initial spike in activity following the lifting of covid restrictions at the start of the year, crude prices were seen rallying on expectations of a steady lift in demand. However, that rally soon faded and with data over recent months pointing to an industrial and consumer slowdown, the crude demand outlook in China has weakened materially, leading to the lower prices we’ve seen in recent months. The hope for crude bulls now is that a fresh fiscal package alongside monetary easing will help spur fresh economic growth, lifting demand for oil near-term.

Technical Views

Crude

For now, crude prices continue to hold below the 72.61 level. This area can be viewed as a key pivot within the larger 65.34 – 82.59 range. If price can break above current resistance, focus will be on the bearish trend line next. While below here, 65.34 remains a viable next move for crude.