Crude Rebounding
Crude prices are trading higher today with the futures market managing to recover ahead of a test of the YTD lows. Prior to the recovery, the market had been under fresh pressure linked to OPEC+ hiking oil output for a second straight month. Ongoing uncertainty around US trade policies has also been a headwind for the oil market which has fallen sharply from the April highs. Indeed, the rebound in crude this week is being linked to technical buying more than any shift in the macro backdrop.
US/China Headlines
Looking ahead this week, focus for crude traders will be on any incoming trade headlines as well as the May FOMC tomorrow. On trade, any positive signals from the US or China should help boost sentiment. However, unless we see any concrete developments (such as negotiations beginning or a reduction in some tariffs) sentiment is likely to weaken as uncertainty persists.
FOMC Expectations
On the Fed front, traders are expecting the bank to keep rates on hold while pushing back against near-term rate cut calls. If USD remains weak on the back of the FOMC this could help lift crude prices further. However, if the Fed dwells too much on trade war risks this could cap the rally in crude for now. Ultimately, the better scenario for crude bulls would be some dovish surprise from the Fed in its guidance and positive US/China trade headlines this week.
Technical Views
Crude
The sell off in crude has stalled for now into a second test of the 57.42 level. With strong bullish divergence in momentum studies, price is potentially carving out a double bottom here against the YTD lows, signalling room for a corrective rally higher. 63.82 and the bear channel highs/67.45 will ne be the two key resistance areas to watch if we move higher here.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
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.