Oil faces volatile week ahead monthly OPEC, IEA reports

• Oil price jumps higher for a fourth consecutive day on Monday.
• Traders are pencilling in a bullish outlook, with demand in Asia to pick up. 
• The US Dollar Index trades at a pivotal level after being glued to it since last week. 

Oil price jumps higher for a fourth straight day in a row on Monday. Oil traders are sending Crude prices higher with the assumption that the monthly report from the Organization of the Petroleum Exporting Countries (OPEC) will still bear a bullish undertone. Certainly, seeing recent price increases from Saudi Arabia towards Asia and Russia set to commit to its production quota by firmly reducing its production over August and September. Volatility is bound to pick up with the report from the International Energy Administration (IEA) on Wednesday, which is often a bit more dovish than the OPEC one. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is still having issues and trades near the pivotal level it was residing around in the aftermath of the rough Monday ride in markets last week. It looks like the DXY will orbit around this level until the first catalyst, which will probably be the US Consumer Price Index (CPI) print for July scheduled for Wednesday. Should that report reveal a pickup in inflation, market repricing would favor a stronger US Dollar. 

At the time of writing, Crude Oil (WTI) trades at $76.25 and Brent Crude at $79.72

Oil news and market movers: Reports to guide markets

• This week starts with the monthly OPEC report on Monday, normally expected around noon during European trading hours. 
• Bloomberg reports that US refiners are set to reduce production, with the biggest producer reporting to operate its plants at only 90% capacity. That level is the lowest since 2020. 
• Saudi Aramco is providing nearly 2 million barrels less in September than it will do for August, Reuters reports.
• Although headlines from the Middle East have moved a bit to the background, tensions are still present, and the element still needs to be factored in as a tail risk for more upside.  

Oil Technical Analysis: Pivotal recovery point

Oil price is rallying higher, with several traders having bought the dip that took place last week. Expect this move to start fading slowly but surely under pressure from profit-taking along the way. The OPEC and IEA report could be the catalyst for that turnaround, together with possible price action turning just ahead or at the 200-day Simple Moving Average near $77.69.

On the upside the pivotal level near $75.27 has now been reclaimed by bulls, which now will act as support level to head back to the 200-day Simple Moving Average (SMA) at $77.69. The two other major moving averages reside very close, with the 55-day SMA at $78.55 and the 100-day SMA at $79.84.

The Relative Strength Index (RSI) has rebounded in the daily chart, meaning there is room again to trend lower. Looking down, the first level to watch out for is $72.00. Once a new low for August gets printed in the charts, another leg lower would not rule out $68.00 or even $67.11, an 18-month low.

US WTI Crude Oil: Daily Chart