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What is pressuring oil?

May 17, 2023

Brent: Brent oil continues to consolidate near $75 per barrel. In addition to weak data from China, pressure on oil is exerted by the sale of oil from US reserves. According to the latest report from the Energy Information Administration (EIA), last week, US crude oil inventories decreased by 2.9 million barrels, which exceeded 2.2 million barrels at the end of April and was the steepest decline since 1983. The agency said yesterday that it will buy 3 million barrels for the reserve, but this will cover only weekly costs of raw materials, and more than 200 million barrels must be bought to compensate for the volumes released over the past year. Given the problems with the debt limit, this is currently impossible. That being said, the decline in oil may continue.

SELL STOP 74.00/TP 72.00/SL 74.70


DXY: The dollar index is trading near 102.50. Yesterday, US retail sales data for April were released. On a monthly basis, retail sales increased by 0.4% against the expected 0.8% growth. Since consumer activity is not improving as fast as experts expected, the Fed has one more reason to end the current policy tightening cycle. At the moment, the probability of a rate hike in June is 16%, which is lower than the 20% that was before the release of the report on retail sales. In addition, traders will continue to analyze the risk of default in the US against the background of the lack of progress on the issue of the debt ceiling. Given the above, we recommend holding short positions on the dollar.

SELL STOP 102.40/TP 101.80/SL 102.60


GBP/USD: The GBP/USD pair holds positions near 1.25. Traders ponder March data on the UK labor market. According to the report, the unemployment rate in England increased from 3.8% to 3.9% last month. At the same time, the average level of wages, including bonuses, increased by 5.8%, as expected by experts, and without them – by 6.7%. Experts believe that the growth of wages may provoke an increase in inflation and force the Bank of England to continue raising the rate. Today traders await the speech by Andrew Bailey, governor of the Bank of England. If he confirms plans for further tightening of the policy, the growth of the pound will continue.

BUY STOP 1.2480/TP 1.2600/SL 1.2440