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• WTI crude futures declined nearly 2.5%, dropping below $67 a barrel, resulting in a monthly loss of almost 11% for May. Concerns arise over a demand slowdown, primarily driven by China, the top crude importer.
• Fresh PMIs for China reveal a further decline in factory activity, along with a slowdown in services and construction in May. These indicators underscore the lackluster nature of the ongoing economic recovery and the weakening demand for commodities.
• Market opinions diverge regarding potential production cuts by OPEC+ during their meeting on June 4. Saudi Arabia’s Energy Minister warns short sellers of potential consequences, while Russia’s Deputy Prime Minister anticipates no new measures, highlighting the recent implementation of production cuts by the group.

The daily interval of the Crude oil futures contract is expected to establish a balanced price range, trading below the developing value areas for both the month and quarter. This suggests a potential selling imbalance in the market. However, it’s worth noting that the prior buying tail, along with supportive buyers from the developing value area of the decade, present areas of interest for adding to core positions – the market still may target the swing lows for absorption purposes.

The combination of a higher dollar in this session and elevated positive volatility creates pressure on this market. From a median-term perspective, the market shows a bearish bias. However, the presence of a higher dollar could serve as a bullish factor, given the shift in the US’s role to that of an oil exporter.

The market is currently in need of working its way back into the developing value range to establish potential buying scenarios. In this context, the VWAP level serves as an area of interest for adding to short core positions during the session while the DVAL is monitored for supportive buying.

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