WTI breaks out ahead of US inflation data
We suspect volatility may be on the quiet side with a US inflation report looming, but this provides the opportunity for markets to consolidate and traders plan trades.
Should we see the pace of inflation to continue slowing, it could strengthen oil prices for two basic reasons.
1 - A weaker US dollar, as traders bring forward rate cut bets / solidifies bets of 5.25% peak rate
2 - Reduces the odds of a recession and increases oil demand expectations
The softer inflation is, the stronger the bullish reaction for oil could be expected.
- WTI futures closed above trend resistance following a bull-flag breakout, which was accompanied by positive-delta volume during the rally to recent highs.
- Prices are now consolidating, but we'd welcome a pullback towards $73 to buy dips in anticipation of a breakout above $74.
- Initial target is $76 (near the upper daily ADR band)
- A move to (and beyond) $77 could be on the cards if we're treated to a weaker-than-expected inflation report
- The bias remains bullish above $72.50
Should we see the pace of inflation to continue slowing, it could strengthen oil prices for two basic reasons.
1 - A weaker US dollar, as traders bring forward rate cut bets / solidifies bets of 5.25% peak rate
2 - Reduces the odds of a recession and increases oil demand expectations
The softer inflation is, the stronger the bullish reaction for oil could be expected.
- WTI futures closed above trend resistance following a bull-flag breakout, which was accompanied by positive-delta volume during the rally to recent highs.
- Prices are now consolidating, but we'd welcome a pullback towards $73 to buy dips in anticipation of a breakout above $74.
- Initial target is $76 (near the upper daily ADR band)
- A move to (and beyond) $77 could be on the cards if we're treated to a weaker-than-expected inflation report
- The bias remains bullish above $72.50