Oil Selling Pauses…For Now
Oil prices have paused in their recent decline today, though remain weak on the back of the heavy selling we’ve seen over the last ten days. Some softening in the trade war landscape has helped stem the sell-off for now, while the impact of a heavily lower US Dollar is also sure to be helping. However, the near-term outlook remains precarious with OPEC+ expected to increase output next month, the prospect of an end to the Russia-Ukraine war (reduced supply risks, return of Russian crude to wider market) and the ongoing tensions between the US and China.
Fresh EIA Inventories Surplus
Yesterday, the EIA reported a further crude inventories build in the US with stockpiles seen rising by almost 4 million barrels. The surplus marks the fifth week of inventories increases in the last six and reflects much weaker demand in the US. Looking ahead this week, traders will be closely watching tomorrow’s US labour market data. Fears that Trump’s trade war could send the US into recession mean that traders are highly sensitive to incoming US data. For crude, the reaction function is a little more mixed given that weaker US data certainly has negative implications for the crude demand outlook but also fuels stronger selling in USD which should offset some of the selling in crude.
Technical Views
Crude
The sell off in crude has seen the market breaking down below the 67.45 level where price is currently stalled. This is a major multi-year support level with risks pointed towards a deeper move lower while price holds below the level. If bulls can get back above, 72.61 will the first objective.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.