Piece written by Alexa Smith, Trive Financial Market Analyst 

The United States Oil Fund (NYSEARCA: USO) experienced a modest decline from its 13-month high due to apprehensions regarding the potential impact of elevated interest rates on oil demand. However, robust holiday demand emanating from China and resilient US fundamentals could continue to propel oil prices.  

China, the world’s largest oil importer, exhibited favourable macroeconomic data, coupled with robust fuel demand coinciding with the commencement of its week-long Golden Week holiday on Friday, which is propelling international travel. Furthermore, the US economy has maintained a commendable growth trajectory in the second quarter, with signs of acceleration evident in the current quarter. These positive economic indicators suggest that strong fuel demand may endure. 

Moreover, the market is being supported by the backdrop of restricted supplies in the US, with storage levels in Cushing, Oklahoma— the delivery point for US crude futures—at their lowest since July 2022. The meeting scheduled by the OPEC+ is also drawing near, which will provide insight into whether Saudi Arabia intends to augment its supply in response to the nearly 30% surge in prices witnessed this quarter. 

Technische Analyse 

An ascending channel pattern is evident on the 1D Chart, with the $60.24 support bolstering the United States Oil Fund to a 13-month high. Since the 50-day moving average is diverging above the 100-day moving average, an uptrend may continue to bolster the ETF. However, supply dynamics and a hawkish Fed could begin to weigh down the price action’s gains.  

If PCE Price Index data showcases a rise, the ETF may succumb to downside pressure and edge towards the $77.53 support at the 23.60% Fibonacci Retracement. However, demand still outweighs supply, which could elevate the price action further to retest the $85.82 resistance and mark a 15-month high.  

Zusammenfassung 

The United States Oil Fund experienced a modest decline ahead of PCE Price Index data expected today. If prices continue to rise, downside pressure could ensue and edge the ETF towards the $77.53 support. However, rising demand could continue to bolster the price action, which could mark the $85.82 resistance as a point of interest for an uptrend.  

Sources: TradingView, Reuters