Oil price rallies after strong US macroeconomic data, bullish triangle forms

• An unexpected rise in US PMI data spurs Oil to rally on increased demand hopes. 
• Oil is supported by optimism US lawmakers will reach agreement to raise US debt ceiling. 
• A bullish triangle price pattern forms on the 4-hour chart increasing the evidence the bearish trend may be reversing.  
• API inventory data to be released later on Tuesday could inject some volatility into Crude Oil price action.

Oil price trades higher on Tuesday continuing its recovery from the poor open at the start of the week, spurred on by strong US macroeconomic data coupled with optimism regarding the outcome of debt-ceiling talks. A recent EIA report highlights increased global demand in the second half of 2023. Oil is supported as Gasoline prices rise over 2.5% ahead of the US Memorial weekend holiday and expectations of increased demand during the summer driving season. Comments from the Saudi Oil Minister on Tuesday, warning speculators to "watch out", suggests Oil price volatility may be on the horizon. 

At the time of writing, WTI Oil is trading in the lower $73s and Brent Crude Oil in the lower $77s. A bullish right-angled triangle has formed on the 4-hour chart, challenging the overarching bear trend.  

Oil news and market movers 

• Oil rallies as the outlook for US growth improves after S&P Global Composite PMI data rises to 54.5 when a drop to 50.0 had been expected.
• Crude is supported as United States lawmakers continue negotiations to raise the debt ceiling and avoid a US government default.
• Republican House Leader Kevin McCarthy expresses optimism after Monday’s talks, saying, “​​I believe we can still get there. I believe we can get it done.” Adding that he thought the talks were the most productive so far.
• Saudi Oil Minister, Prince Abdulaziz bin Salman, warned Oil speculators to "watch out" and that they might suffer as they did "in April", ahead of the OPEC+ meeting on June 4.
• Prince Abdulaziz went on to defend OPEC+ and its decision to cut production by 2 million barrels per day (bpd) in October 2022. Given the Oil price is at similar levels now, it may suggest there is a risk of OPEC+ deciding on another cut to raise prices in June.
• Gasoline prices surged higher on Tuesday in response to increased demand ahead of the US Memorial weekend and the summer driving season, supporting Crude Oil prices.
• The last EIA report highlighted a demand gap in the second half of 2023 could lead to Oil shortages and higher prices to come.
• Oil price struggled at the beginning of the week, partly as a result of global trade concerns after major economies clashed at the G7 summit in Japan.
• China further provoked the US by banning imports of memory chips from US manufacturer Micron, citing security risks.
• The US Dollar catches a bid on Tuesday as Federal Reserve (Fed) officials continue to talk about the possibility of more rate hikes, providing a headwind for Oil, which is priced in USD.
• API inventory data out at 20:30 GMT will provide an indication of demand and supply dynamics in the crude market and could impact Oil prices if it comes out substantially higher or lower than last week’s 3.69 million barrels figure.
• A higher result would signal increasing supply and weigh on Oil prices and vice versa for a lower data point.
• S&P Global PMI data at 13:45 GMT could also impact Oil prices via the US Dollar – if it beats expectations it is likely to support USD and weigh on Oil and vice versa if lower.