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Trends & Analysis
News

HPE stock jumps 28% on Q2 beat, boom in AI business

News

Oil spikes over 1% as Israel intensifies attacks

News

Gold surges amid US-Iran deal prospects

News

Dow hits record closing high on US-Iran peace deal hopes

News

Nvidia’s stock dips despite Q1 beat, strong forecast

News

CAD falls versus USD following inflation data

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Asset Watch

Is the crude sell-off over?

Tuesday, May 9, 2023

Even though any whisper of a deposit run causes investors to sell cyclical assets, S&P Global and J.P. Morgan revealed on May 5 that their Global Composite PMI hit a 16-month high of 54.2. The report stated:
“The start of the second quarter saw a further acceleration in the rate of global economic expansion. Growth of output and new orders hit their highest levels since December 2021
 and March 2022 respectively, as job creation and business optimism also strengthened….
“All of the 14 nations for which April composite PMI data were available registered an expansion of combined manufacturing and service sector output, the first-time concurrent growth has been recorded since June 2022.”

So, while crude oil has declined by nearly 16% over the last three weeks, are brighter days ahead?

On top of the fundamental strength, the technicals are also constructive. Crude bounced after dipping below its 200-week moving average and closed the week above the key level. The grey arrows show how the 200-week MA acted as support during the March sell-off, also aiding the bulls in June, August and October 2019. As a result, a technical floor is present near $67.

As warmer weather approaches, travel demand and increased gasoline usage could paint a rosier demand picture in the months ahead.

Will crude make a lasting comeback, or is a breakdown below the 200-week MA up next?


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