Oil broke above its 100-day moving average as a shale executive in Houston predicted America’s most prolific basin will arrive soon, even as China’s dovish economic forecast limited the rise in crude oil.
The key technical level was breached for the first time in four months on lackluster US supply expectations. Oil production in the Permian Basin will peak in five to six years, Pioneer CEO Scott Sheffield told Bloomberg TV on Monday at S&P Global’s CERAWeek.
“Crude oil is breaking out of its recent trading range in what started as a bearish day after China’s 5% GDP target,” said Rebecca Babin, senior energy trader at CIBC Private Wealth.
Oil was pressured by China’s latest economic growth target, which was lower than economists had expected, suggesting that a rise in the country’s crude consumption will be smaller than bulls had expected. Meanwhile, Group CEO Gunvor noted that the trading house does not see any major disruption of flows from Russia for the next month so far.
Dueling hopes about China’s recovery and expectations of more interest rate hikes from the Federal Reserve have kept oil prices in a tight range and squashed volatility this year. The commodity has already had more days swinging below $2 in 2023 than in all of 2022.
Investors this week will also be looking to jobs data and speeches from Fed Chairman Jerome Powell this week for clues on the path for rates, with the possibility of higher borrowing costs and a longer period of restrictive monetary policy that poses a disadvantage for global fuel consumption.
Prices:
- WTI for April delivery rose 78 cents to settle at $80.46 a barrel in New York.
- Brent for May settlement gained 35 cents to settle at $86.18 a barrel.
