NYMEX crude oil focuses on support at $71.88
On Monday (May 29), international oil prices fell, although US leaders reached a tentative debt ceiling agreement last weekend, which may avoid the debt default of the world‘s largest economy and the largest oil consumer, but concerns about further interest rate hikes by the Federal Reserve gave the oil market bring pressure. NYMEX crude oil focuses on the support of $71.88.
At 20:54 Beijing time, NYMEX crude oil futures fell 0.63% to $72.21 a barrel; ICE Brent crude futures fell 0.74% to $76.41 a barrel.
U.S. President Joe Biden and House Speaker Kevin McCarthy reached an agreement over the weekend to suspend the $31.4 trillion debt ceiling and limit government spending for the next two years. Both leaders expressed confidence that lawmakers from both parties would vote for the deal.
The United States is close to avoiding a debt default, rekindling investor appetite for riskier assets such as commodities. Analysts said the interim agreement has eased pressure on the market, providing a relief rally for risk assets including crude oil.
“As U.S. traders wrap up the Memorial Day long weekend, we could see more gains as broader financial markets start to see a relief rally,” said Vandana Hari, founder of oil market consultancy Vanda Insights. “
But the U.S. debt deal may not be a boon for the oil market for long. Tony Sycamore, an analyst at IG in Sydney, said the sustainability of the rally in oil prices was questionable as the Fed’s preferred measure of inflation rose more than expected in April, making it more likely that the Fed will raise interest rates in June. “Rising U.S. interest rates are bad for crude oil demand.”
Last week, Saudi Energy Minister Abdulaziz warned bears betting on lower oil prices to be “cautious.” It is believed that this may be a signal that OPEC+ may further cut production. However, comments from Russian officials, including Deputy Prime Minister Alexander Novak, suggested the country appeared inclined to keep output unchanged.
On the hourly chart, NYMEX crude oil retested $71.88, which is the 23.6% Fibonacci retracement of the downtrend between $74.73 and $71. If this price is lost, the market outlook is expected to fall below the $71 mark; otherwise, oil prices are expected to resume their upward trend.