West Texas Intermediate (WTI), futures on NYMEX, are gathering support for extending a rally above the crucial resistance of $72.00 in the early Tokyo session. The oil price has attracted bullish traction as various central banks along with the Federal Reserve (Fed) are considering an end to their policy-tightening spell to avoid further damage to their respective economies.

Investors are anticipating that no more interest rate hikes from the Fed would support producers’ confidence and would assure recovery in economic activities. The release of April’s US Employment report indicated that the Fed won’t be in a hurry in hiking interest rates further in June. The impact of higher employment additions faded after March’s job additions of 263K were downwardly revised to just 165K.

The absence of any juggernaut addition of fresh talent into the US labor market indicates that the demand for fresh labor is easing, which would soften inflationary pressures ahead. Also, the current monetary policy is sufficiently restrictive and weighs heavily on the economy.

Apart from that, the European Central Bank (ECB) slowed down their pace of interest rate hike to 25 basis points (bps) as credit disposals by European banks have dropped sharply.

Meanwhile, In China, however, factory activity contracted unexpectedly in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector, as reported by Reuters, which could act as a headwind of the oil price.

Going forward, investors will keep focus on potential US banking jitters and the meeting of US President Joe Biden with Speaker Kevin McCarthy and other congressional leaders on Tuesday's looming debt ceiling talks. Interested parties are expected to negotiate as Republicans conveyed that an increase in the debt ceiling would come at a cost of the President’s spending initiatives when met last in February.