Investing.com — Oil bulls are starting to see some reprieve after four weeks of dreary market performance. But it hasn’t to do as much with demand as it has with supply.
Reports of Canadian wildfires and how they could impact the outflow of oil from the North American producer to the United States sent crude futures rallying by more than 1% Monday.
At least 300,000 barrels of oil equivalent per day production was shut in last week in Alberta, Reuters reported. In 2016, Canadian wildfires knocked out more than a million barrels of oil equivalent per day of production.
On the average, the United States sources about half of its oil imports from Canada.
“It’s significant no doubt, what’s at stake from these wildfires,” said John Kilduff, partner at New York energy hedge fund Again Capital. “That aside, there is also some technical rebound after four straight weeks of losses in crude futures.”
“But going ahead, the path of least resistance still seems lower as worries over the state of the U.S. economy, inflation and debt prevail over everything else.”
London-traded , the global benchmark for oil, settled up $1.06, or 1.4%, at $75.23 per barrel. Brent dropped by 14% over the previous four weeks.
New York-traded West Texas Intermediate, or , crude settled up $1.07, or 1.5%, at $71.11 per barrel. WTI had fallen by 15% over the past four weeks.
If WTI regains its upside mojo, it could move towards $75; otherwise, it could slide further, possibly even threatening $60 support, Sunil Kumar Dixit, chief technical strategist at SKCharting.com said.
“Consolidation above $70 will help some recovery towards $71.70 and $72.20, above which further upside towards the $73.80 resistance can be witnessed,” Dixit said. “If rebound continues above this zone, next upside targets will be $74.70 and $75.70.”
“On the flip side, a sustained break below $70 will ease the way down towards the 200-week Simple Moving Average, or SMA, of $66.90. If WTI breaks and closes the day below the 200-week SMA of $66.90, the upcoming correction is likely to extend deeper into the 100-month SMA of $59.45.”
Focus across markets is now on a slew of Federal speakers this week, most notably Chairman Jerome Powell on Friday, for their insights into U.S. monetary policy.
Signs of stubborn inflation have led some economists to rethink expectations that the Fed will cut interest rates this year. With investors worried that the Fed’s aggressive rate hikes could tip the economy into recession, appearances by several central bank officials in the coming days will be closely watched.
Fed Vice Chair for Supervision before Congress on recent banking sector stresses and the central bank’s response. On Friday, and former Fed head Ben Bernanke are to participate in a panel discussion on monetary policy in Washington.
Other Fed officials scheduled to make appearances during the week include New York Fed President John , Cleveland Fed Governor Loretta , Minneapolis Fed President Neel and governors Philip and Michelle .
Bowman said Friday that the Fed will probably need to raise rates again if inflation stays high.
The United States is also to release April data on and on Tuesday, with retail sales expected to rebound. The weekly report on is due out on Thursday.
The bipartisan Congressional Budget Office warned on Friday that the United States faced a “significant risk” of defaulting within the first two weeks of June if lawmakers fail to increase the amount of debt the country is legally allowed to take on.
Talks between President Joe Biden and his Republican rivals on raising the $31.4 trillion debt ceiling are expected to resume early this week, after a planned meeting on Friday was postponed to allow staff to continue negotiations.
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