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Crude oil, which is up by about 6.4% in the New York trading session, got some attention with the output cut of about 1 million barrels a day by OPEC+. The market trades around $80 per barrel in a balanced price range as traders lean on the extreme to conclude rotational scenarios.

The production cut might lead the Fed to keep the interest rates high due to the potential inflationary effect of the soaring oil price. Investors concluded a dovish tone by the recent easing inflationary data sets, leading the projections of cuts around July to November for monetary easing.

However, current data suggest some economic weakness which leads equities to drive higher by a potential easing factor in the mentioned projections. The ISM Manufacturing PMI decreased to 46.3 in March of this Year, pointing to a contraction in the manufacturing sector, including production – which should rise to fight inflation.

Meanwhile, a seeming agreement has been reached with the Turkish port Ceyhan to resume the oil export – after Kurdish authorities halted exports of around 400,000 barrels a day.

China’s reopening and recovery lead on the demand side to optimistic views which can support the oil price as well. The higher demand could help to reduce the impact of a slower global growth due to the current monetary tightening from several central banks to fight inflation.

Looking at the daily interval of Crude oil, we can observe that the market soared from the lower Quarter’s value extreme to the higher extreme, the so-called Developing Value Area High (DVAH). There it found some long liquidations which could lead the market to pullback while the current discussed output cut boosting prices.

Monitoring the dollar with Crude oil prices, the correlation changed towards the oil prices as the U.S. turned to an oil exporter which should support trade followed by higher value of the greenback. For this reason, the market might be pressured by the lower dollar for the session, which is down by about 0.4% as index against the majors in the New York trading session.

The Commitment of Traders (COT) report as of the 28th of March, shows a short covering of about 46.726 contracts of WTI Crude oil, Futures and Options combined. This explains the reversal from about two weeks ago with potential support for core buyers around the Decade’s developing VWAP. 

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