Weekly Outlook on Crude Oil- 26 May 2023

Crude oil prices retreated nearly 3% on Thursday's session after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting on June 4.

The Russian president also said on Wednesday that energy prices were approaching economically justified levels, also indicating there could be no immediate change to the group production policy. Now, traders are looking for more clarity about OPEC's plan for further production cuts, while concerns over the U.S. debt ceiling are likely to push the economy into recession.

                                                Oil prices decline ahead of more cues on OPEC and strong dollar momentum                         

The dollar index prices surged to a two – month high against a basket of other major currencies, keeping further pressure on oil prices.
  
On the NYMEX division, Brent oil prices fell by 2.6% on Thursday's session and trimmed most of their gains this week.

Technically, the WTI prices rejected from the resistance of 50-DEMA and traded lower for the day. A momentum indicator, Stochastic, signalled negative crossover and moved lower from the overbought territory. MCX, crude oil also faced resistance around a 50% retracement level and formed a Bearish Engulfing candlestick pattern on the daily timeframe that suggests a bearish move for the near term. The price has also breached an immediate support at 6070 levels and traded below the 6000 mark on the Friday morning session.
 

Hence, traders are advised to trade cautiously and keep an eye on the OPEC meeting and further developments in U.S. debt ceiling negotiations as both events can accelerate the further volatility in prices. On the downside, if the price moves below 5880 levels, one can look for bearishness to till 5700 and 5550 levels.

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