OIL MARKET RECOVERY STALLED BY UNCERTAINTIES AND GEOPOLITICAL TU

With June right at the corner, and this month staging 87% recovering in the black gold market, prices have unfortunately found a strong level at the $34 handle. The WTI index has struggled to cheer the USD's weakness and is currently trading in red in the Asian session with a correction of 1.5% from the Thursday session. Investors' sentiment is dampened amid heightening uncertainties with the current situation in Asia with the latest signal from the US of a possible change in its long-standing policy towards China and its internal affair within Hong Kong.

Technically speaking, the price action had a seesawing week, consolidating between $30 and $34 handle. Although trading above the smaller EMA 18 & 50, MACD is finally showing diminished bullish momentum, turning a bit sour with the intention to form a sell signal. RSI condition is moving far from its overbought level. Investors should consider further movement in the price action before placing their bets.

Any unexpected situation can quickly tarnish the positive momentum in the market. Yesterday's report about the massive buildup in the US crude inventories where the levels rose to 7.9 M barrels from a forecast of -2.5 M, instead of dropping the price, actually gave additional support to the market. It does not look right; the continued appearance of positive momentum and this rebalance faster than expected might be more artificial than real. However, by June is expected a 4 Mb/d increase in demand and cuts in the supply of about 12 MB/d could bring the market into balance.