Oil prices are rebounding slightly on Friday, extending Thursday’s gains after snapping the losing streak for this week. The rebound, however, could be short-lived as the price outlook remains clouded by concerns over demand  and a vast supply surplus at hand if OPEC does not alter the upcoming unwinding of production cuts. OPEC is caught between a rock and a hard place, because sticking to their earlier commitments makes the cartel creditworthy, while coming back on previous statements would make markets less compelled to listen to any further communication from OPEC, and therefore losing grip on Oil pricing. 

The US Dollar Index (DXY), which tracks the performance of the US Dollar against six major currencies, is facing a moment of truth. The annual Jackson Hole Symposium gets underway with the main event being a speech by US Federal Reserve Chairman Jerome Powell. The speech has a lot of weight as it is seen as a market-moving and policy-changing event, outside of the scheduled Fed policy meetings. 

At the time of writing, Crude Oil (WTI) trades at $74.13and Brent Crude at $77.75

Oil news and market movers: Bets are placed

• Bloomberg Analytics reports that the Oil market has little room to process additional OPEC barrels that will be released onto markets once the production cuts have been lifted.
• Morgan Stanley issued a report this Friday trimming its forecast to $80 per barrel for Brent Crude, down $5 previously expected. Global demand growth is set to diminish as well from 1.1 million barrels per day from 1.2 million barrels due to sluggish Chinese demand.
• Near 17:00 GMT, the Baker Hughes Oil rig count is to be released. The previous count came in at 483, with no forecast available. 
• US Federal Reserve Chairman Jerome Powell is set to speak at 14:00 GMT. His speech will be released at that time while he will be taking the stage. 

Oil Technical Analysis: Oil snaps DXY correlation for this week

Oil not only snaps this week’s losing streak, it also breaks up its correlation with the US Dollar Index (DXY) that markets have seen in the past few days. While the DXY is rather sideways to lower for this Friday, Crude price is popping higher by 1%.  This renewed enthusiasm among Oil traders should be taken with a pinch of salt considering the medium-term outlook, but at least it is helping Oil to avoid a decline below $70.00 for now. 

On the upside, it becomes very difficult to be bullish with a lot of resistance levels nearby. The first element to look out for is the pivotal $75.27. Next up is the double level at $77.65, which aligns with both a descending trendline and the 200-day Simple Moving Average (SMA). In case bulls are able to break above it, the 100-day SMA at $78.45 could trigger a rejection.  

On the downside, the low from August 5 at $71.17 is working its magic as it was able to eke out this bounce that now enters its second day of existence. Under $70.00, the $68.00 big figure is the first level to watch followed by $67.11, which is the lowest point from the triple bottom seen back in June 2023. 

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