Oil falls back in red territory following PCE figures

Crude prices gave up on previous attempts to avert losses and ultimately lost -0.69%, trading at $76.85 per barrel, the low of the North American session, while Brent dropped to $81.03 earlier in the day. At the time of writing, Crude Oil (WTI) trades at $77.31 and Brent Crude at $81.45


In order to decide on production cutbacks, OPEC+ will meet virtually. Most analysts predict that the present production restrictions will last until 2025. The US Dollar Index swings between the mid-104.50- and further below 105.00 levels.

Although US shares were falling, oil prices were attempting to recover and are again back at the session’s low. Thoughtful, the minutes following the US Personal Consumption Expenditures (PCE) report showed a declining US dollar, rising stock prices, and some breathing room for oil to rebound. Oil prices fell back to the session’s bottom an hour into the US trading session, turning this weekly performance into a loss.

The US Dollar Index (DXY), on the other hand, is currently trading slightly below 105.00 after a turbulent week. The Greenback screamed on Wednesday as bond dealers demanded a greater yield for the provided debt issuances during some substantial US sovereign debt bond auctions, pushing yields higher overall. But on Thursday, the gain was reversed by the announcement of the Gross Domestic Product and some lower US housing statistics. The US Personal Consumption Expenditure (PCE) Price Index report, which came out on Friday, had a disinflationary reading that sent the Greenback lower.


OPEC+ meeting on Sunday 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 output is constrained by external factors such as sanctions or war.
Both Bloomberg and Reuters have reported plans to keep production cuts in place heading into 2025, according to sources close to the matter.

UAE and Kazakhstan are set to jack up their production in the near future with new installations and production sites set to come online. Traders keep pointing to the uncertain US economic outlook with an unclear monetary policy ahead, while the US housing market is showing signs of a cooldown.

This Friday closes off with the weekly Baker Hughes Oil Rig Count data at 17:00 GMT. The previous number was a count of 497.

Technical Outlook: A lost summer for Crude prices
Oil prices are exhibiting their sensitive side once more, and traders undoubtedly do not believe that demand will increase up anytime soon. Over the past two weeks, the Fed has made it very evident that there is no prospect of an initial rate cut in 2024. There is not much that OPEC+ can do about it, and extending production curbs until 2025 may not be sufficient to close the gap between present supply levels and the forecast for weak demand.

The Simple Moving Averages (SMA) must first be brought back under control. The initial levels on the upswing are the 200-day SMA at $79.56 and the 100-day SMA at $79.05. Next, there is a region with a 55-day Simple Moving Average (SMA) at $81.22 and a declining trendline at $81.75.

In terms of downward action, the $76.00 mark is re-entering the picture, and traders must pay close attention to the $75.27 level in order to maintain a chance to return to $80.00. If the crucial barrier of $75.27 breaks, there could be a dangerous decline that might go as low as $68, below $70.00.