Crude Fighting Back
Following heavy selling across the start of the week, oil prices have since stabilised and are now starting to recover. Crude futures found support into the 72.61 level with the market since gaining around 2.5% of the week’s lows. The latest EIA data on Wednesday helped to assuage demand concerns with the group reporting an almost 5-million-barrel drawdown last week, more than double the 2-million-barrel draw forecast and a stark shift from the prior week’s 1.4-million-barrel surplus.
US Economic Fears
The data comes amidst shifting views on the US economy as traders continue to grapple with recessionary fears. A lower trending jobs market has raised concerns over the risk of a downturn in coming quarters, with inflation now falling steadily again also. However, better-than-forecast retail sales helped to smooth these concerns. This week, PMI readings for July offered a mixed view with the services sector seen growing firmly while manufacturing fell deeper into negative territory.
Fed Easing Forecasts
For now, it seems the prospect of a weaker US Dollar in line with increasingly dovish Fed expectations is helping underpin oil prices somewhat. Today, traders will be watching for fresh dovish signals from Fed’s Powell to help drive oil prices higher as USD comes under fresh pressure. Oil might receive an additional boost if Powell makes any comments that downplay recessionary risks while keeping the focus on expected easing in September.
Technical Views
Crude
The sell off in crude has stalled for now into the 72.61 level with price now seeing a shallow bounce. While this level holds, a fresh rotation back up towards 77.64 is viable. Below here, however, focus shifts to 67.45 as deeper support, with the bear channel lows coming in ahead.
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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.