Crude Oil Futures are heading higher towards $83 a barrel as the market finds buying with tighter oil supplies and a weaker dollar.

The month surprised the market with an output cut of about 1.1 million bpd from May for this year which soared the price to five-month highs. The OPEC cartel warned about demand concerns as the US could be hit by a recession and a weaker economy with the current higher interest rates, even China’s reopening could or may not fill the demand loss of a weakening global economy.

The IEA suggested in a report that world oil demand might increase towards 2 million bps this year to about 102 million bpd. Additional cuts by OPEC+ might cut oil supply down by about 400K bpd by this year, which would soar prices as of a potential supply deficit around July.

The weakening dollar might be supportive for global commodities such as Copper, Gold, or Crude oil, while the WTI sort might be pressured as the US changed its role to the next exporter with a higher trade might add value to the dollar. A weakening economy with lower demand for oil might pressure oil prices with a lower dollar.

Looking at the current TPO profile, we can observe an unsecured high which could advertise higher prices as the prior session closed as an inside bar, and traders may suggest trading with Wednesday’s profile structure. The b-shaped profile may hint at a bullish bias for the session as the market found absorption around the previous day’s lows. The lower POC could emerge as supportive for core long positions. However, taking yesterday’s p-shaped profile structure into the analysis, we could see some resistance around the POC, which serves as a point to determine the further direction of the market – a move above, and traders might initiate a rally to higher prices. In summary, mixed signs might lead to rotational scenarios with the current little-changed dollar.

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Taking a glance at the COT report for Crude oil, Option, and Futures combined as of the data from the 4th of April, we can observe newly established long positions of about 18.004 contracts and a short covering of about 44.737 contracts. The data points to a bullish managed money sector.

Current interest rate hike projections pointing to a dovish tone and a potential easing in the monetary tightening cycle let the equities and commodities sectors soar to new highs while the dollar pressured, which led to additional support in the oil prices. Producer prices fell by about 0.5% in the month-to-month data, which suggests potential higher production data which could fight inflation additionally, soared the current total odds of rate cuts starting around November to about 70% and a probability of about 49% for rate cuts starting around July while next meeting points to an increase of about 25 bps. 

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