Oil Lower on Monday
Oil prices are on watch today with plenty of volatility risk seen with Trump’s return to office. Crude prices have been firmly higher over January, linked to better US data, and an improving outlook in China. However, Trump has the potential to unseat recent gains if he takes the aggressive trade action promised over his campaign. Specifically with China, the prospect of fresh trade levies at a time when activity and demand is finally starting to rise again on the back of recent stimulus measures, could send oil prices lower near-term. Given China’s role as the top-crude importer, fresh tariffs could seriously dent crude imports, sending oil prices lower across the board.
Israel Ceasefire Impact
News of a ceasefire between Israel and Hamas is also weighing on oil sentiment here. Supply risks linked to ongoing violence in the Middle East has been a key upside driver for oil prices over the last year with crude often rallying in response to news of any escalation in violence. Though tentative and subject to collapse, the ceasefire has mitigated these risks near-term, with crude likely to see further unwinding if the ceasefire is maintained. On the other hand, if the ceasefire collapses, oil prices are vulnerable to a fresh spike higher as those supply risks rush back into focus for traders.
Technical Views
Crude
The rally in crude has stalled for now with the breakout above the bear channel highs and 77.64 failing. Price is now trading back below the level and with momentum studies softening, focus is on a further fall and a test of support at 72.61 next. In the Signal Centre today we have a sell limit at 78.88, suggesting a preference to stay short into any pop higher from current levels.
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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.