Crude oil bounced back after testing early April lows – was it just an upward correction?
Crude oil closed 3.43% higher on Tuesday, rebounding from its recent sell-off and Monday's low of $55.30. The recovery gained momentum as prices bounced from an important support level marked by the April 9 low of around $55.
For oil markets specifically, these developments are worth monitoring:
- After OPEC+ announcements over the weekend caused a sell-off, the market is now climbing from technical oversold conditions in what appears to be classic "sell the rumor, buy the fact" price action.
- U.S. Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer will meet their Chinese counterparts for trade talks in Switzerland this week, potentially easing concerns about global demand.
- The Federal Reserve will announce its interest rate decision today, with markets widely expecting rates to remain unchanged.
- U.S. crude inventories data will be released at 10:30 a.m. today, with API data already showing a 4.5 million barrel decrease in stockpiles for the week ended May 2, indicating strong demand.
Conclusion
Crude oil has rebounded significantly after testing important support levels, with improving US-China trade sentiment and expectations of tighter U.S. supplies providing additional support.
For now, my short-term outlook is neutral.
No positions are currently justified from a risk/reward perspective.
Here’s the breakdown:
- Crude oil has bounced strongly from key technical support at the April low.
- U.S.-China trade talks signal potential de-escalation in tensions, which could improve demand outlook.
- The Federal Reserve decision today could influence dollar strength and consequently oil prices.
As always, we’ll keep you, our subscribers, well-informed.
Thank you.
Paul Rejczak,
Stock Trading Strategist