Oil Prices Rebound Following Powell’s Speech Amid Stubborn Uncertainty

Oil prices saw a modest increase on Friday, extending gains from the previous day and snapping a losing streak for the week. However, the rebound could be short-lived as concerns over demand and a potential supply surplus loom large.

OPEC finds itself in a challenging position. Adhering to their previous production cut commitments could bolster their credibility, but reversing course could undermine their influence over oil prices. The cartel’s decision will significantly impact the market’s outlook.

The US Dollar Index (DXY) is also facing a crucial moment. The annual Jackson Hole Symposium, featuring a speech by Federal Reserve Chairman Jerome Powell, is expected to have a significant impact on market sentiment and potential policy changes.

Oil news and market movers:

Analysts warned that the oil market may struggle to absorb additional OPEC barrels once production cuts are lifted. Morgan Stanley lowered its Brent Crude forecast to $80 per barrel, citing weaker global demand growth and sluggish Chinese consumption. The Baker Hughes Oil rig count is due for release later today. Fed Chair Powell’s speech at the Jackson Hole Symposium is highly anticipated.

Technical analysis:

Oil’s correlation with the DXY has weakened, suggesting a potential decoupling.
• Upside resistance levels include $75.27, $77.65, and $78.45.
• Downside support levels are at $71.17, $70.00, and $67.11.

While the oil market has seen a short-term rebound, the longer-term outlook remains uncertain due to geopolitical factors, economic indicators, and OPEC’s policy decisions.