Crude Short oil make another bearish attempt
Mis à jour
The price of crude oil is currently under bearish pressure below $70.00. No lower low printed on the daily chart yet in the previous bearish attempt. However, observing the candle close, there are more bearish candlesticks with strong momentum. It can be said that the sentiment is bearish and the bear traders have the upper hand. For now, traders should watch price developments by observing new higher high or lower low.
Today’s critical level to watch:
Support: $70.00, $65.00
Resistance: $77.13, $80.00, $85.00
WTI crude futures extended losses to nearly 5% to below $67 per barrel on Monday, the lowest in over five weeks, as concerns about weakening demand in top consumer China and rising Russian crude supply outweighed Saudi Arabia's plans to slash output. Russian oil exports to China and India rose to record levels in May even after the implementation of the European Union’s embargo and the Group of Seven’s price cap mechanism that started in early December. On the other hand, Saudi Arabia, the world's largest oil exporter, announced earlier this month its intention to reduce output by 1 million barrels per day to 9 million bpd in July, the lowest level in years amid an effort to bolster crude prices. Meanwhile, investors are cautious ahead of a busy week ahead with the US inflation rate and interest rate decisions from the Federal Reserve, the ECB and the BoJ.
WTI crude oil is trending lower inside a newly-formed falling channel on its hourly time frame. Price just broke through the mid-channel area of interest and is setting its sights on support around $68 per barrel.
Commodities like crude oil are currently being weighed down by dollar strength, as traders appear to be pricing in another Fed interest rate hike during the FOMC statement this week.
Prior to that, the US CPI is up for release, and a strong headline figure might be enough to ramp up hopes for a 0.25% increase in borrowing costs. Recall that the May NFP reading also beat estimates again, so the US central bank has some room to tighten.
Meanwhile, crude oil could also take cues from the API and EIA inventory numbers, as another draw in stockpiles might mean upside for the commodity. A build, on the other hand, might suggest that purchases are slow or that supply remains elevated.
Still, keep in mind that the OPEC+ announced voluntary output cuts, which could translate to lower global supply levels.
However, technical indicators are suggesting that a bounce is due soon. For one, the 100 SMA is above the 200 SMA to show that bullish pressure is present and that support is more likely to hold than to break. Then again, crude oil is trading below both indicators, so these could hold as dynamic resistance levels on rallies.
Stochastic has been reflecting oversold conditions for quite some time, so turning higher would mean a return in bullish pressure. The oscillator has plenty of room to climb before reaching the overbought zone, so buyers could stay in control for a while.
RSI has also been lingering around the oversold area for a while, so a return in upside momentum might be due soon.
US Inflation Rate Seen Falling to 4.1%
The annual inflation rate in the US likely fell to 4.1% in May 2023, the lowest since March 2021, from 4.9% in April and 5% in March, mainly due to lower energy prices. On a monthly basis, the CPI is projected to increase by 0.2%, easing from a 0.4% rise in April. Meanwhile, core inflation is expected to decrease to 5.3% from 5.5%, with the monthly rate projected to remain at 0.4%, the same as in April. The upcoming data precedes the Federal Reserve's interest rate decision on Wednesday and is expected to strengthen the case for a pause in its tightening cycle.
The annual inflation rate in the US likely fell to 4.1% in May 2023, the lowest since March 2021, from 4.9% in April and 5% in March, mainly due to lower energy prices. On a monthly basis, the CPI is projected to increase by 0.2%, easing from a 0.4% rise in April. Meanwhile, core inflation is expected to decrease to 5.3% from 5.5%, with the monthly rate projected to remain at 0.4%, the same as in April. The upcoming data precedes the Federal Reserve's interest rate decision on Wednesday
and is expected to strengthen the case for a pause in its tightening cycle.
European Natural Gas Down after Last Week's Rally
Natural gas futures in Europe fell more than 6% below €30 per megawatt-hour, on some profit-taking after last week's 35% rally as investors weigh lower supplies against ample gas storage levels and weaker demand. Gas shipments from the US are becoming scarcer as the supply is funneled to Asia, where prices are more competitive in the summer months due to stronger demand for cooling. Meanwhile, Norway's Equinor has postponed the restart of its Hammerfest LNG plant to June 14 due to technical difficulties. Additionally, the Turkstream gas pipeline, which transports gas from Russia through the Black Sea to Turkey, has been closed for maintenance work. Currently, Europe's gas storage is 70.4% full, and the European Union aims to achieve a storage inventory target of 90% by November 1.
Brent crude futures fell below $74 per barrel on Monday, as concerns about weakening demand in top consumer China and rising Russian crude supply outweighed Saudi Arabia's plans to slash output. Russian oil exports to China and India rose to record levels in May even after the implementation of the European Union’s embargo and the Group of Seven’s price cap mechanism that started in early December. On the other hand, Saudi Arabia, the world's largest oil exporter, announced earlier this month its intention to reduce output by 1 million barrels per day to 9 million bpd in July, the lowest level in years amid an effort to bolster crude prices. Meanwhile, investors are cautious ahead of a busy week ahead with the US inflation rate and interest rate decisions from the Federal Reserve, the ECB and the BoJ.
Today’s critical level to watch:
Support: $70.00, $65.00
Resistance: $77.13, $80.00, $85.00
WTI crude futures extended losses to nearly 5% to below $67 per barrel on Monday, the lowest in over five weeks, as concerns about weakening demand in top consumer China and rising Russian crude supply outweighed Saudi Arabia's plans to slash output. Russian oil exports to China and India rose to record levels in May even after the implementation of the European Union’s embargo and the Group of Seven’s price cap mechanism that started in early December. On the other hand, Saudi Arabia, the world's largest oil exporter, announced earlier this month its intention to reduce output by 1 million barrels per day to 9 million bpd in July, the lowest level in years amid an effort to bolster crude prices. Meanwhile, investors are cautious ahead of a busy week ahead with the US inflation rate and interest rate decisions from the Federal Reserve, the ECB and the BoJ.
WTI crude oil is trending lower inside a newly-formed falling channel on its hourly time frame. Price just broke through the mid-channel area of interest and is setting its sights on support around $68 per barrel.
Commodities like crude oil are currently being weighed down by dollar strength, as traders appear to be pricing in another Fed interest rate hike during the FOMC statement this week.
Prior to that, the US CPI is up for release, and a strong headline figure might be enough to ramp up hopes for a 0.25% increase in borrowing costs. Recall that the May NFP reading also beat estimates again, so the US central bank has some room to tighten.
Meanwhile, crude oil could also take cues from the API and EIA inventory numbers, as another draw in stockpiles might mean upside for the commodity. A build, on the other hand, might suggest that purchases are slow or that supply remains elevated.
Still, keep in mind that the OPEC+ announced voluntary output cuts, which could translate to lower global supply levels.
However, technical indicators are suggesting that a bounce is due soon. For one, the 100 SMA is above the 200 SMA to show that bullish pressure is present and that support is more likely to hold than to break. Then again, crude oil is trading below both indicators, so these could hold as dynamic resistance levels on rallies.
Stochastic has been reflecting oversold conditions for quite some time, so turning higher would mean a return in bullish pressure. The oscillator has plenty of room to climb before reaching the overbought zone, so buyers could stay in control for a while.
RSI has also been lingering around the oversold area for a while, so a return in upside momentum might be due soon.
US Inflation Rate Seen Falling to 4.1%
The annual inflation rate in the US likely fell to 4.1% in May 2023, the lowest since March 2021, from 4.9% in April and 5% in March, mainly due to lower energy prices. On a monthly basis, the CPI is projected to increase by 0.2%, easing from a 0.4% rise in April. Meanwhile, core inflation is expected to decrease to 5.3% from 5.5%, with the monthly rate projected to remain at 0.4%, the same as in April. The upcoming data precedes the Federal Reserve's interest rate decision on Wednesday and is expected to strengthen the case for a pause in its tightening cycle.
The annual inflation rate in the US likely fell to 4.1% in May 2023, the lowest since March 2021, from 4.9% in April and 5% in March, mainly due to lower energy prices. On a monthly basis, the CPI is projected to increase by 0.2%, easing from a 0.4% rise in April. Meanwhile, core inflation is expected to decrease to 5.3% from 5.5%, with the monthly rate projected to remain at 0.4%, the same as in April. The upcoming data precedes the Federal Reserve's interest rate decision on Wednesday
and is expected to strengthen the case for a pause in its tightening cycle.
European Natural Gas Down after Last Week's Rally
Natural gas futures in Europe fell more than 6% below €30 per megawatt-hour, on some profit-taking after last week's 35% rally as investors weigh lower supplies against ample gas storage levels and weaker demand. Gas shipments from the US are becoming scarcer as the supply is funneled to Asia, where prices are more competitive in the summer months due to stronger demand for cooling. Meanwhile, Norway's Equinor has postponed the restart of its Hammerfest LNG plant to June 14 due to technical difficulties. Additionally, the Turkstream gas pipeline, which transports gas from Russia through the Black Sea to Turkey, has been closed for maintenance work. Currently, Europe's gas storage is 70.4% full, and the European Union aims to achieve a storage inventory target of 90% by November 1.
Brent crude futures fell below $74 per barrel on Monday, as concerns about weakening demand in top consumer China and rising Russian crude supply outweighed Saudi Arabia's plans to slash output. Russian oil exports to China and India rose to record levels in May even after the implementation of the European Union’s embargo and the Group of Seven’s price cap mechanism that started in early December. On the other hand, Saudi Arabia, the world's largest oil exporter, announced earlier this month its intention to reduce output by 1 million barrels per day to 9 million bpd in July, the lowest level in years amid an effort to bolster crude prices. Meanwhile, investors are cautious ahead of a busy week ahead with the US inflation rate and interest rate decisions from the Federal Reserve, the ECB and the BoJ.
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CURRENCYCOM:US100 longnasdaq100 us100 we go to 15200 where the profit taking and reveras begins US100 Long Rises Higher to 15200zone,the possible correction
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US Dollar Index: DXY fades recovery below 104.00 on downbeat Fed bets, US inflation eyedUS Dollar Index struggles to extend the previous day’s corrective bounce off three-week low, snaps two-day winning streak.
Markets remain nearly sure of witnessing no rate hike from Fed in June but concerns about July stay dicey.
Bond market moves, challenges to sentiment prod DXY bears ahead of the key US CPI.
Core CPI will be closely observed as high inflation can allow FOMC to remain hawkish despite no rate hike decision.
US Dollar Index (DXY) remains pressured around 103.60 as it fades the previous two-day winning streak on Tuesday as the key US inflation data looms. That said, the greenback’s gauge versus the six major currencies rose in the last two consecutive days amid the market’s positioning for the Federal Reserve’s (Fed) pause to the rate hike trajectory. However, the recently mixed concerns about the US central bank’s future moves join the challenges to the sentiment to prod the DXY buyers ahead of an important data point for the markets.
It’s worth noting that a study from the San Francisco Fed about the correlation between wage growth and inflation could be cited as the reason for the US central bank to remain less hawkish, which in turn weighs on the DXY, apart from the pre-data anxiety. The survey concluded that wage growth has a very small impact on inflation, which in turn raises doubts about the central bankers’ emphasis on wage cost numbers as a source of information to gauge inflation pressure.
Talking about the latest challenges to sentiment, a trade dispute is developing after the US expands its ban on imports from Xinjiang. China vows to protect China firms against any US sanctions, per Reuters. Recently, Bloomberg released prepared remarks of US Treasury Secretary Janet Yellen’s scheduled Testimony in front of the House Financial Services Committee as she said that the International Monetary Fund (IMF) and the World Bank (WB) serve as important counterweights to nontransparent, unsustainable lending from others, like China.
Additionally, the increase in the bets favoring the Federal Reserve’s (Fed) 0.25% rate hike in July also prod optimism and put a floor under the US Dollar Index. It should be noted that the CME’s FedWatch Tool suggests nearly limited scope for the US central bank to act on Wednesday’s Federal Open Market Committee (FOMC).
Looking ahead, the US Consumer Price Index (CPI) figures for May will be in the spotlight as the Fed decision looms on Wednesday. That said, the market forecasts of witnessing no change in the Core CPI MoM figure of 0.4% gain major attention as softer figures could push back the July rate hike concerns and may not allow the Fed to sound hawkish, which in turn can drown the US Dollar.
Note
European equity markets were set for a positive open on Friday, tracking global peers higher amid bets that US interest rates could be nearing their peak as the American economy loses momentum and after the Federal Reserve paused its tightening campaign in June. Meanwhile, the European Central Bank opted to raise interest rates by another 25 basis points, with ECB President Christine Lagarde saying ‘we are not thinking about pausing.” Investors now look ahead to final euro zone inflation figures and wage growth data for further clues on the economy and future monetary policy. DAX futures jumped 0.9%, Stoxx 600 futures gained 0.5% and FTSE 100 futures edged up 0.2% in premarket trade.
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