Crude consolidates

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Crude oil spent the latter half of last week moving sideways. There was relatively little movement this morning as well, as markets continued to consolidate following the sharp rally which took place over the last couple of weeks. At the beginning of this month, front-month Brent and WTI hit their lowest levels since early February. Since then, both have rallied over 7% and are trading back at ‘mid-range’ levels. The daily MACDs on both Brent and WTI have also turned up, and are now approaching neutral levels, with an upside bias. There was a clutch of mixed economic data from China overnight. Overall, it wasn’t particularly helpful for bullish sentiment. Last week brought some encouraging surveys for crude demand growth for the rest of this year. But the real test will come from the economic outlook for the US, particularly when it comes to the potential for rate cuts for this year and next. While the Fed’s FOMC dialled back its rate cut expectations for 2024, it did increase them for next year. There’s no shortage of supply as far as crude is concerned, so it really is down to demand growth going forward.