Crude Oil set for weekly loss on waning worries about supply

• Crude Oil edges up slightly after the sharp correction earlier this week. 
• Markets are rebalancing after the news that Saudi Arabia is giving up its price target of $100 per barrel and mulls an increase in output. 
• The US Dollar Index holds steady ahead of PCE inflation data for August. 

Crude Oil is bouncing off a substantial support level on Friday, consolidating the recent losses the commodity had to digest earlier in the week. Still, Oil is set to close the week in the red, weighed by news that Saudi Arabia – the world’s largest crude exporter – is letting loose on its $100 price target and is thinking about increasing production, The downturn seen this week could be seen as an adjustment to the additional supply that will likely be released to markets.  

The US Dollar Index (DXY), which tracks the performance of the Greenback against six other currencies, is consolidating ahead of the Personal Consumption Expenditures (PCE) Price Index data. With the release of this index, which is the Federal Reserve’s (Fed) preferred inflation gauge, markets will get another piece of the puzzle to work out how big the November interest-rate cut will be. Expect to see volatility pick up should PCE beats expectations. 

At the time of writing, Crude Oil (WTI) trades at $67.40 and Brent Crude at $70.99.

Oil news and market movers: Once risk fades, supply is there

• Oil demand should pick up in Asia after the People’s Bank of China’s (PBoC) decision to lower interest rates and inject liquidity into the banking system.  Beijing assembled a last-ditch stimulus assault to pull economic growth back towards this year's roughly 5% target, Bloomberg reports.
• Fuel distributors in Florida are bracing for supply shortages as government officials issued dire warnings about strengthening hurricane Helene, which made landfall in the state on Thursday evening, Reuters reports.
• At 17:00 GMT, the Baker Hughes OIl Rig Count is due to be released. The previous number was at 488, with no forecast available. 
• Israel continues this Friday with its bombing of Hezbollah military installations in Lebanon. 

Oil Technical Analysis: Under the hood supply remains solid

Crude Oil traders are letting prices bounce on Friday after the sharp price correction unfolded over the past two days. When stripping away the risk premiums that are being priced in on geopolitical developments as in Lebanon or Ukraine, supply is flowing. With more supply from Saudi Arabia set to hit markets, more downturn looks inevitable. 

At current levels, $71.46 is back in focus as a first price cap on the upside after a brief false break. If positive momentum continues, a return to $75.27 (the January 12 high) could play out. Along the way towards that level, the 55-day Simple Moving Average (SMA) at $73.83 could ease the rally a bit. Once above $75.27, the first resistance to follow is $76.24, with the 100-day SMA in play. 

On the downside, $67.11, a triple bottom in the summer of 2023, should support any downturns and trigger a bounce.  Further down, the next level is $64.38, the low from March and May 2023. 

US WTI Crude Oil: Daily Chart