Crude Oil Sidesteps Trade War Fears, Inventory Drawdowns Continue

Crude Oil Sidesteps Trade War Fears, Inventory Drawdowns Continue

Fundamental Forecast for USOIL: Bullish

Talking Points:

  • The ONE Thing: Crude oil merchants witnessed a clearly bullish report because the weekly Department of Energy knowledge confirmed an aggressive draw at -12.633mn barrels towards the anticipated -3.9mn. The draw was the most important seen since September 2016.
  • Per BHI, U.S. Oil Rig Count stays flat at 863, US whole rely at 1,054
  • The components that appear to be holding again costs had been doubtless the construct in distillates of +4.125mn barrels along with the broader danger sentiment dip that was seen this week on the escalation of commerce wars.
  • Crude sees the most important intraweek decline in 5 months

The present uptrend in crude oil is somewhat over a yr previous, and merchants stay on the fence as as to if the price of Oil is about to take a brand new leg increased towards $77/bbl for WTI or $89/bbl for Brent. The hesitancy to bid costs increased regardless of the huge DoE draw on Wednesday and no new oil rigs added on Friday is probably going as a result of choices skew that’s pricing much less upside potential for oil and weakening bodily construction as backwardation lessens.

Another darkish cloud hanging over the commodities market is the commerce conflict. The darkish cloud was evidenced by China’s crude imports falling in June by 12% to eight.39 million b/d, the bottom stage since December, per the General Administration of Customs in Beijing.

As of Friday, the weekly loss on WTI & Brent crude was 3.35 & 2.14% respectively, which is up from an intraweek low of 5% after US President Trump utilized tariffs on nearly 50% of US imports from China escalating concerns about the US-Sino trade war.

The Massive DoE Drawdown Was the Largest Since September 2016

Crude Oil Sidesteps Trade War Fears, Inventory Drawdowns Continue

Data supply: Bloomberg

Once once more, WTI and Brent crude has turn out to be the market everyone seems to be discussing! Unlock our forecast here

Crude Oil Holds Above Broad Support with Concerning Macro Fundamentals

Crude Oil Sidesteps Trade War Fears, Inventory Drawdowns Continue

Chart Source: Pro Real Time with IG UK Price Feed. Created by Tyler Yell, CMT

After breaking beneath $70/bbl on Thursday to a weekly low of 69.23 and the bottom stage since late July, WTI crude and Brent have since rebounded although they’re nonetheless within the purple on the week. Despite the pullback from the July Opening Range high of $75.27 merchants are nonetheless having a tough time betting aggressively on additional sequential weak point. If something, merchants are much less bullish, but, not outright bearish, which aligns with the charts.

One the chart above, WTI bounced off the Ichimoku cloud and above the 50% retracement of the 2014-2016 vary as help. The sturdy transfer favors continuation of the broad uptrend. The weekly low of $69.23 is an applicable bias level to carry a bullish view. A break and shut beneath $69.23 from right here would warn of additional weak point regardless of the crude stock drawdown.

Technical resistance, which is necessary given the latest reversal is coming off of 3-year highs can be at $74.70/bbl, which is the July 10 excessive. An in depth above there would align with the chart patterns {that a} transfer towards the trendline and 61.8% retracement of the 2014-2016 vary close to $77/bbl stays in play.

Next Week’s Data Points That May Affect Energy Markets:

The basic focal factors for the vitality market subsequent week:

  • Monday: U.S. President Donald Trump and Russian President Vladimir Putin maintain their first summit
  • Tuesday 4:30 PM ET: API Weekly Oil Inventories Report
  • Wednesday 10:30 AM ET: EIA points weekly US Oil Inventory Report
  • Wednesday: JODI points oil export and output knowledge for May
  • Thursday: API’s Monthly Statistical Report
  • Friday 1:00 PM ET: Baker-Hughes Rig Count
  • Friday 3:30 PM ET: Release of the CFTC weekly commitments of merchants report on U.S. futures, choices contracts

—Written by Tyler Yell, CMT

Tyler Yell is a Chartered Market Technician. Tyler supplies Technical evaluation that’s powered by basic components on key markets in addition to buying and selling instructional assets. Read extra of Tyler’s Technical experiences via his bio page.

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