Oil rises on Monday ahead of OPEC’s monthly release

• Oil prices rose for the fourth consecutive day on Monday.
• Traders are penciling in an optimistic outlook, demand from Asia is set to increase.
• The US dollar index is trading at a pivotal level after being stuck to it since last week.

Oil prices rose for the fourth consecutive day on Monday. Oil traders are sending crude prices higher on the assumption that the monthly report from the Organization of the Petroleum Exporting Countries (OPEC) will continue to have an upbeat tone. Certainly, seeing the recent price increases from Saudi Arabia to Asia and Russia, it will commit to meeting its production quota by firmly cutting production in August and September. Volatility is bound to return with the International Energy Agency (IEA) report on Wednesday, which is often a bit more dovish than OPEC.

The U.S. Dollar Index (DXY), which tracks the U.S. dollar’s performance against six major currencies, is still struggling and trading close to the pivotal level it was in following Monday’s rough run in markets last week. It looks like the DXY will orbit around this level until the first catalyst, which is likely to be the July US Consumer Price Index (CPI) print scheduled for Wednesday. Should the report reveal an increase in inflation, the market repricing would favor a stronger US dollar.

At the time of writing, crude oil (WTI) is trading at $76.25 and Brent at $79.72.

Oil News and Market Development: Reports to Guide the Markets

• This week starts on Monday with OPEC’s monthly report, normally expected around noon during European trading hours.
• Bloomberg reports that US refiners are set to cut production, with the largest producer reporting that it is operating its plants at just 90% of capacity. This level is the lowest since 2020.
• Saudi Aramco is supplying nearly 2 million barrels less in September than it will for August, Reuters reports.
• Although Middle East headlines have moved to the background a bit, tensions are still present and the element should still be considered as a tail risk for more upside.

Technical Analysis of Oil: Pivot Point of Recovery

The price of oil is rising, with more traders buying the dip that took place last week. Expect this move to start to fade slowly but surely under profit pressure along the way. The OPEC and IEA report could be the catalyst for this recovery, along with possible price action to return to just before or at the 200-day simple moving average near $77.69.

On the upside, the pivotal level near $75.27 has now been reclaimed by the bulls, which will now act as a support level for a return to the 200-day simple moving average (SMA) at $77.69. The other two major moving averages are very close, with the 55-day SMA at $78.55 and the 100-day SMA at $79.84.

The Relative Strength Index (RSI) has returned to the daily chart, meaning there is room for a lower trend again. Looking down, the first level to watch out for is $72.00. Once a new low for August is printed on the charts, another lower level would not rule out $68.00 or even $67.11, an 18-month low.

US WTI Crude Oil: Daily Chart