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Oil attempts to break through Resistance Levels

Crude oil prices had increased by almost 1% on Friday, and continue to increase during today’s Asian session. They are currently 0.50% higher than the market open price and have already reached Friday's intraday high. However, the price of the hot commodity is being influenced by opposing factors.

On the one hand, the price is pressured by economists advising that there is a “high risk” of the global economy witnessing a recession towards the end of the year. Contraction (recession) within the global economy would result in reduced demand for energy assets. We can already see that the demand for energy is at risk as a result of the current levels of inflation, economists say.

On the other hand, the market also has elements potentially pushing the energy prices higher. Their rise over the past few days has been partially facilitated by the threat of a potential ban on Russian oil supplies to the Eurozone. In addition to this, the US president has advised that the US may seek to end certain tariffs on Asian markets, and India has decided to lower taxes on oil in order to protect demand. All these developments have supported the price of oil over the past 3-4 trading days.

Crude oil prices appear to be experiencing low volatility this morning. The market seems to be trading cautiously as the price reaches the main resistance range between $109 and $113 again. The price is moving in favor of a potential intraday upward trend, but traders should be cautious of retracements and corrections. Currently, the price remains above significant moving averages and the volume-weighted average price, both of which indicate a strong price sentiment.

Bearish price movements over May have not been able to maintain momentum for more than 2 days or break to lower prices. At the same time, the momentum towards a longer-term bullish trend has also lost momentum because traders are hesitant about trading at such high prices. Currently, they are looking for strong influencing factors to position themselves accordingly within the market.

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