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Crude Breaking Higher
Oil prices are this week trading at their highest levels since April. Crude futures have put in a solid rally over the last month, rising by over 17% from the July lows. Price is now testing a key resistance level which will be make or break for the bull move. With USD moving higher across the last fortnight, the rally in crude is somewhat surprising and speaks of shifting demand expectations.
US Economic Strength
With the Fed no longer forecasting a recession in the US and recent US data highlighting continued strength in the economy, demand expectations are picking up. Fear of a US recession had been a major headwind for oil prices over much of the year so this is an important shift in the macro backdrop.
China Econ Support Measures
Additionally, China announced further measures this week aimed at propping up the economy. On the back of a slew of actions recently, the government was forced to intervene yet again this week following a 4th consecutive negative manufacturing reading. The hope is that these measures will start to take effect in coming weeks and months, helping to lift demand for oil.
OPEC Cuts & EIA Data
The recent OPEC+ production cuts are also an important factor to note and, with the potential for the group to announce further cuts, should help drive oil prices steadily higher. Tomorrow, traders will turn their attention to the latest EIA inventories data as a key piece of insight into the demand story in the US currently.
Technical Views
Crude
The rally in crude prices has seen the market breaking out above the bearish trend line and above the 72.61 level. Following a retest of that level price has since broken higher still and is now testing the 82.59 area. This is a major pivot point for the market, capping the YTD range. With price having failed here several times this year, some near-term correction is not unlikely. However, if bulls can break higher here, focus will shift to 93.47 next.
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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.