Weaker Dollar Helping 

Following heavy selling at the start of the week, oil prices are trading higher ahead of the weekend. Crude futures have climbed back into positive territory on the week, helped by a weaker USD and look poised for further upside near-term. The Dollar fell on the back of the FOMC meeting on Wednesday which saw the Fed holding rates steady while signalling the room to make fresh increases as needed. However, with the ECB meeting on Thursday striking a far more hawkish tone, USD dropped sharply which has helped underpin commodities prices across the board, including oil.

PBoc Rate Cut

Alongside this, fresh stimulus from the PBoC this week, which cut rates for the first time in 10 months, has also added to bullish sentiment. Looser monetary conditions in China are good news for oil demand and we’ve seen crude prices rising steadily, offsetting weaker industrial data from China earlier in the week.

Huge EIA Surplus Overlooked

Indeed, the rally in crude comes despite the EIA reporting a huge, unexpected 8 million barrel inventories surplus last week. The data was in stark contrast to the 1.3 million barrel deficit the market was looking for. Still, for now it seems that a weaker USD is the bigger driver and while the greenback continues lower, focus is on further upside for oil.

Technical Views

Crude

For now, crude prices remain underpinned by the 65.34 level which has been a key support level over recent months. While this level holds, risks of a recovery higher are in focus. Bulls will need to see a firm break of 72.61 and the bear trend line to encourage a fresh push higher towards 82.59.