The US dollar has initially pulled back a against the Japanese yen before turning around again on Thursday. That being said, we are between the 50 and the 200 day EMA indicators, which typically means trouble. Furthermore, the ¥107.50 level continues to be an area worth watching. After all, the market has seen a lot of selling pressure in that area and we must remember that the Federal Reserve continues to flood the markets with greenbacks. It is only a matter of time before the idea of resistance comes back into play, and therefore we sell off.
USD/JPY Video 14.08.20
However, this pair is a little bit different in the fact that the Federal Reserve is loose, while the competing central bank is just as bad. Because of this, this could be a very choppy situation. It is worth noting that the Japanese yen is losing strength against several other currencies at the moment, so that could continue to play happy care.
Nonetheless, it is not until we break above the 200 day EMA which is above the ¥107.50 level that I would consider buying. Right now, I am looking for signs of exhaustion that I can sell but have only had a couple of short-term trades set up. I would look for huge moves at this point, the longer-term the US dollar certainly seems to be in trouble. Furthermore, if we get some type of major “risk off” type of macro event, which let us face it here – that could happen, we could see the Japanese yen strength in any way.
The British pound has rallied significantly during the trading session on Thursday, as it looks like we are going to continue to consolidate in this general vicinity. At this point in time, it is only a matter of time before we break above the 1.3150 level. Ultimately, if the market breaks above there it is likely that we could go looking towards the 1.35 handle.
To the downside, the 1.30 level continues to offer significant support, and therefore if we were to break down below there, I think it would be interesting to see what happens next. I have a theory that we will find plenty of support underneath at the 1.2750 level which of course is a major support area that extends down to the 1.2650 level. The 50 day EMA is at the top of the range, while the 200 day EMA is at the bottom.
GBP/USD Video 14.08.20
Having said that, I do think that we probably break out to the upside first but am open to both scenarios. One thing is for sure, I have no interest in shorting this market, because the pair is certainly in an uptrend. With that being the case, there is no point in trying to short this market, and therefore I am simply either buying the breakout or purchasing value as it appears. With this, I do believe it is only a matter of time before we go much higher as the Federal Reserve continues to destroy the US dollar by flooding the market with them.
The British pound has rallied significantly during the trading session on Thursday to break above the ¥140 level early during the day. The pair does seem to be getting ready to break out, and now that we are piercing this level, it shows that we will more than likely eventually do that. By doing so, it could open up a huge move towards the ¥145 level, although it will take a certain amount of time. When you look at the chart, you can make an argument for the market just breaking out of a bullish flag, and now trying to get over the resistance barrier.
GBP/JPY Video 14.08.20
At this point, the market should be a buying opportunity on dips, and I do think that it is only a matter of time before a lot of traders take advantage of this. With this being the case, the market is likely to continue to see a lot of interest in going long, as this pair is highly sensitive to risk appetite, which seems to be increasing over time. After all, stock markets are reaching all-time highs in the United States, so that is a good sign that risk appetite has returned.
Furthermore, the British pound continues to be bought overall, so that is a bit of a “one-two punch” of this pair going higher. The market continues to be very noisy, but overall, this is a very strong market that continues to look like it will attract more buyers. I have no interest in shorting this pair, and even if we did break down from here, I think that the 200 day EMA underneath would be massive support as well.
The Euro has rallied significantly during the Thursday session, as we continue to see a lot of volatility in this marketplace. Ultimately, I think that we find a reason to go higher but it may take some time to get there. After all, the market has been extraordinarily bullish for some time, so it should not be a huge surprise that we have seen the market grind sideways for the last couple of weeks, but it looks like we are carving out a very well defined consolidation region. The 1.17 level on the bottom is massively supportive, while the 1.19 level above is massively resistive. Ultimately, we will break out of this range and depending on which direction will determine the destination.
EUR/USD Video 14.08.20
On a breakout above the 1.19 level then I think it is a relatively commonly held belief that the market goes looking towards 1.20 level next as it is a large, round, psychologically significant number that a lot of people will pay close attention to. If we break down below the 1.17 level, then I believe that the market goes looking towards 1.15 handle underneath, which should be massive support as it was the scene of a major breakout. I am not looking to short this market on a breakdown below the 1.17 level, rather I would be willing to buy it down at the 1.15 level as it is value at this point. Furthermore, the 50 day EMA sits just below it, so I think it is a good shot that buyers would jump in based upon technical analysis if nothing else.
The Australian dollar has shown itself to be very resilient over the last several weeks, but here recently we have seen the market go back and forth around the 0.7150 region. At this point, the market is likely to continue to be sideways, as we try to digest all of those gains and come to grips with the idea of this market going much higher over the longer term. That being said, markets do not go straight up in the air forever, so I do think that we are likely to see a lot of sideways action in the meantime. Longer-term though, I think it is only a matter of time before the market goes much higher.
AUD/USD Video 14.08.20
Looking at the Australian dollar, the 0.70 level underneath is massive support that extends all the way to the 0.71 level above. All things being equal, this area should hold as support for the longer-term move, but at this point we do not really have a catalyst for the markets to go higher quite yet. Remember, the Australian dollar did not break down as gold fell apart for a loss of over $100 the other day, so that does show just how strong the Aussie could be as the correlation between the two markets is so high. Overall, I do like buying dips on this market, but you may need to be extraordinarily patient to wait to see profits coming from long position.
In these situations, markets will deceptively reward ineffective behavior (chasing) which can lead to a false sense of confidence. If you are in this coin, the best thing to do is reduce risk by taking partial profits until this thing produces a clear sell signal. If you are not in it, the best thing to do is WAIT for a retrace to the next support level.
Some key inflection points to consider: The 18 level is a proportional projection measured from the March low. Not only is it a psychological whole number, it is a location where the probability of selling activity is high. Even though there is no sell signal in place, this is the highest risk/lowest probability location to put on a new position. Buying into a potential top automatically puts you into a weak psychological position that often leads to exiting for a loss at the worst possible location (the low of the next support).
The 14.50 area is a minor support level as evidenced by the recent price activity in the area. A sharp retrace can find some support here, but it is important to WAIT for reversal structure in order to justify risk, because IF this level is cleared, the next inflection point is 11.50 followed by the 8.50 area. Can price retrace this far? It is possible, but the idea is to WAIT for such an opportunity, IF the market produces one. If not, the best thing to do is find a better opportunity in terms of reward/risk.
The herd mentality lures novice traders over and over again and is part of the market process. In order to win, you must not only be aware of it, but you must also know how to capitalize on it which requires counter intuitive thinking.
USD/JPY is trying to pull back after the recent upside move but stays above the 50 EMA at 106.60.
The U.S. Dollar Index has recently tried to get to the test of the 93 level but received some support near 93.10. The American currency continues to suffer from uncertainty regarding the next U.S. coronavirus aid package.
At this point, negotiations between U.S. Republicans and Democrats have stalled and it is not clear whether consensus will be reached anytime soon.
Usually, such uncertainty would have provided significant support to the Japanese yen but the recent increase in U.S. bond yields served as a positive catalyst for the U.S. dollar.
Today, the U.S. bond yields are falling back but it remains to be seen whether yields are ready to continue the previous downside trend.
Japan has recently provided producer prices data for July. On a month-over-month basis, producer prices increased by 0.6% compared to analyst consensus which called for an increase of 0.3%. Year-over-year, producer prices declined by 0.9% while analysts expected a bigger decline of 1.1%.
USD/JPY is trying to settle below the nearest support level at the 50 EMA at 106.60. In case USD/JPY manages to get below the 50 EMA, it will likely gain more downside momentum and head towards the next support level at the 20 EMA at 106.20.
A move below the 20 EMA will mark the end of the current upside momentum, and USD/JPY will try to establish a new downside trend.
On the upside, the first resistance level for USD/JPY is located at the recent highs at 107.00. If USD/JPY gets above this level, it will head towards the massive resistance area between 107.30 and 107.50.
This resistance area has been tested many times in July. At that time, USD/JPY failed to gain more upside momentum and started a downside move which took it closer to 104.00 before it was able to rebound to 107.00.
Given the strength of the 107.30 – 107.50 resistance area, USD/JPY will need strong upside catalysts to continue the rebound.
Falling Bond Yields And Stimulus Uncertainty Put Pressure On The U.S. Dollar
EUR/USD is trying to settle above the nearest resistance level at 1.1800 as the U.S. dollar continues to lose ground against a broad basket of currencies amid U.S. stimulus uncertainty and falling U.S. government bond yields.
The U.S. Dollar Index has recently managed to get below 93.20 and is trying to get to the test of the 93 level. In case the U.S. Dollar Index manages to settle below 93, EUR/USD will gain additional upside momentum.
The main problem for the U.S. dollar right now is the complete uncertainty regarding the fate of the new U.S. coronavirus aid package. Negotiations between Democrats and Republicans have stalled and it is not clear whether they will be restarted this week.
On top of that, the U.S. government bond yields have started to pull back after the recent upside move, putting additional pressure on the American currency.
In Europe, Germany has recently provided inflation numbers for July. Germany’s Inflation Rate was -0.1% on a year-over-year basis and -0.5% on a month-over-month basis.
The inflation report was fully in line with the analyst consensus. Germany’s inflation numbers contrast with U.S. inflation numbers which were reported yesterday. In the U.S., Inflation Rate was 1% on a year-over-year basis while Core Inflation Rate was 1.6%.
EUR/USD managed to get above the nearest resistance level at 1.1800 and is trying to gain more upside momentum.
RSI is in the moderate territory so EUR/USD has decent chances to develop momentum in case the U.S. dollar continues to show weakness against a broad basket of currencies.
The nearest resistance level for EUR/USD is located at 1.1880. In case EUR/USD settles above this level, it will head towards the next resistance at 1.1910.
On the support side, the previous resistance level at 1.1800 will likely serve as the first support level for EUR/USD. A move below this level will open the way to the test of the major support level at the 20 EMA at 1.1725.
Cisco Systems, Inc. (CSCO) plunged 6.44% in after-hours trade Wednesday on the back of declining fiscal Q4 revenues and downbeat guidance for the current quarter. The company, which manufactures networking hardware and security software, reported quarterly sales of $12.15 billion, down from year-ago revenues of $13.43 billion.
Meanwhile, adjusted earnings for the period came in at 80 cents per share compared to 83 a share in the quarter ended July 2019. However, the San Jose-based company’s top- and bottom-line figures surpassed Wall Street expectations by 0.50% and 8%, respectively.
Through Wednesday’s close, Cisco stock has a market capitalization of $203 billion, yields an enticing 3.05%, and trades just 2.52% higher on the year. Performance has improved over the past three months, with the shares gaining around 12%.
Soft Forward Guidance
Management forecast Q1 adjusted earnings guidance of 69 cents to 71 cents and a revenue decline of 7% to 9%. Analysts had projected earnings of 76 cents and $12.25 billion in sales for the quarter, representing about a 7% decline.
The company said it plans to acquire network intelligence company ThousandEyes in the quarter for $1 billion to provide a range of remote work and learning solutions. In recent years, Cisco has made a strategic shift to generate more revenue from software and service solutions to compete with cloud offerings from tech heavyweights Amazon.com, Inc. (AMZN), Microsoft Corporation (MSFT), and Alphabet Inc. (GOOGL).
“By the end of fiscal 2020, we achieved our goal of more than half of our revenue coming from software and services, and this strategy continues to resonate with customers as they digitize their organizations,” Cisco Chief Executive Chuck Robbins said in a statement accompanying the quarterly results, per MarketWatch.
Wall Street Outlook
Despite the stock’s lackluster performance relative to the technology sector, analysts remain modestly bullish. The stock receives 13 ‘Buy’ ratings, 1 ‘Overweight’ rating, and 13 ‘Hold’ ratings. Price targets range from as high as $60 to as low as $41, with a consensus of $50.05. This represents a 4% premium to Wednesday’s $48.10 close.
Technical Outlook and Trading Tactics
Since testing the low 30s in mid-March, Cisco shares have made a Nike swoosh-like recovery. Over the past two months, the price looks to be carving out the right shoulder of an inverse head and shoulders pattern – a formation that typically signals a market bottom. Furthermore, the 50-day simple moving average (SMA) crossed above the 200-day SMA last month to indicate a new uptrend. Traders should use any weakness as a buying opportunity, providing the stock remains above the June 11 low at $43.64. Look for a move up to the $57.50 level, where price funds overhead resistance from a horizontal trendline.
GBP/USD moved closer to the high end of the trading range between the support at 1.3010 and the resistance at 1.3110 as the U.S. dollar started to lose ground against a broad basket of currencies amid uncertainty regarding the new coronavirus aid package.
The U.S. Dollar Index has settled below 93.50 and tries to get to the test of the 93 level. If this happens, GBP/USD will have a good chance to test the nearest resistance level at 1.3110.
In the U.S., talks between Republicans and Democrats have stalled as both sides accused each other for failure to reach consensus on the new coronavirus aid package deal.
U.S. House Speaker Nancy Pelosi, a Democrat, stated that negotiators remained miles apart and that Republicans would have to come back to the table to continue negotiations.
Meanwhile, U.S. Treasury Secretary Steven Mnuchin argued that Democrats had no interest in negotiating.
The U.S. clearly needs another round of stimulus to boost consumer spending and support economy so current problems on the negotiation front put pressure on the U.S. dollar.
However, it looks like traders believe that Republicans and Democrats will ultimately reach a deal. Otherwise, the U.S. dollar would have experienced more serious weakness.
GBP/USD has recently failed to settle below the support level at 1.3010 and rebounded closer to the higher end of the current range at 1.3110.
In case GBP/USD manages to settle above the resistance at 1.3110, it will likely gain upside momentum and head towards the next resistance level near the recent highs at 1.3200.
RSI is in the moderate territory so there is plenty of room to develop upside momentum in case the right catalysts emerge.
On the support side, a move below the nearest support level at 1.3010 will open the way to the test of the next support level at the recent lows at 1.2980. The 20 EMA is in the nearby so this level is set to provide strong support to GBP/USD.
A move below the 20 EMA will be problematic for GBP/USD bulls since GBP/USD will likely gain significant downside momentum and head towards 1.2900.
USD/CAD tested the support level at 1.3235 as the U.S. dollar lost ground against a broad basket of currencies while WTI oil tested the resistance at $42.50.
The U.S. Dollar Index has settled below 93.50 amid continued uncertainty regarding the fate of the new U.S. coronavirus aid package.
U.S. Treasury Secretary Steven Mnuchin has indicated that Republicans and Democrats may fail to reach a deal. This will be an unpleasant scenario for the U.S. economy which heavily depends on consumer activity.
Meanwhile, the U.S. has reported Inflation Rate and Core Inflation Rate data for July. On a year-over-year basis, Inflation Rate increased by 1% while Core Inflation Rate increased by 1.6%.
Analysts expected that Inflation Rate would increase by 0.8% while Core Inflation Rate would increase by 1.1%.
The significant increase in U.S. inflation is a potential major catalyst for the markets. In case inflation reports in the next few months confirm the trend, traders may start thinking about their assumptions of permanently low rates.
The U.S. debt market has already reacted to the new data, and yields on U.S. government bonds are increasing.
At this point, the increase in U.S. government bond yields did not provide support to the U.S. dollar but the situation may quickly change in case yields continue to rise.
USD to CAD made an attempt to settle below the nearest support level at 1.3235 but this attempt was not successful. However, USD to CAD has decent chances to get below this level in case oil continues to rise or U.S. dollar loses more ground against a broad basket of currencies.
In this case, USD to CAD will gain more downside momentum and head towards the next support level at 1.3200.
On the upside, the nearest resistance level for USD to CAD is located at 1.3330. This resistance level has been tested during today’s trading session, and USD to CAD failed to settle above it.
In case the next test of this resistance level is more successful, USD to CAD will head towards the 20 EMA at 1.3380.
The S&P 500 has rallied significantly after initially dipping during the trading session on Wednesday. That being said, we have turned around to see buyers jump into this market and pushed above the 3370 level. At this point in time it is only a matter of time before the market goes looking towards the 3400 level, which is the all-time high. I think it is only a matter of time before we break above there, and when we do the S&P 500 will go looking towards the 3500 level. Short-term pullbacks will continue to offer buying opportunities as the Federal Reserve floods the market with US dollars. As long as that is the case, money managers will be buying “things”, including stocks.
S&P 500 Video 13.08.20
To the downside, I see the 3300 level as being massive support, just as the 3200 level is. The 3200 level underneath is also supported by the 50 day EMA, so I think that will simply be the “floor” of the market. We are in an uptrend for a reason, and that is liquidity. This liquidity continues to be a major driver of the markets as it has been over the last 12 years. Overall, this is a market that will be noisy but is decidedly positive. With that being the case, it is almost impossible to short this market, at least not until we break down below the 3200 level, and that would probably take some doing to change the overall attitude. There is a lot of noise out there, but pay attention to price, because price is truth.
Silver markets have gone back and forth during the trading session on Wednesday, as the $25 level has offered a bit of support. We did break down below that level initially to reach down towards the $24 level, before bouncing again. We even rallied as much as $26.01 point, but the most important thing to take away from the candlestick is that it shows a certain amount of stability, something that is desperately needed in this market. At this point, I think that value hunters are starting to step in slowly and perhaps we have avoided a major catastrophe. This is an area that has seen a lot of choppy trading in the past, so it is not a huge surprise to see that we bounced a bit.
SILVER Video 13.08.20
To the downside, the $22 level should be supportive, as the 50 day EMA is in that same general vicinity, and then most certainly there should be plenty of support at the $20 level. That was the scene of a major breakout, and there will be a significant amount of market memory just waiting to happen. If we break to the upside, then the market is going to go looking towards the $28 level, possibly even the $30 level. At this point in time, it looks as if the 50% Fibonacci retracement level has been touched from the move higher, so it does make sense that we could see buyers jump in and in this general vicinity. One thing I think you can count on is a significant amount of volatility more than anything else.
The West Texas Intermediate Crude Oil market has rallied a bit during the trading session on Wednesday, but still has not broken out of the range. The one thing we can take away from this chart though is the fact that we are grinding higher overall, and it is obvious that the buyers are slowly gaining the upper hand. With that being said, pullbacks are still bought on short-term charts, and I think that the likeliest of scenarios will be that we get the eventual breakout and move towards the $49 level based upon currency movement and OPEC restrictions on production.
Crude Oil Video 13.08.20
Brent markets have also rallied, but unlike the WTI market have not broken above the 200 day EMA. By showing the strength that we have in the WTI market, it is very likely that Brent will follow suit given enough time. Over here I like buying short-term dips as well, but I would not be looking for big moves regardless. The 50 day EMA underneath is a massive support level, and at this point in time it is not until we break down below there that I would consider shorting this market. It is obvious that the tenacity in this market will eventually take over, and when it does, I think that Brent will go looking towards the $50 level above. We could even break above there and go even higher, but this will be based upon the US dollar and inflation more than anything else.
Natural gas markets have pulled back a bit during the trading session on Wednesday, to reach down towards the $2.10 level early in New York trading. However, this is a market that I still believe has a lot of pressure underneath and should eventually go higher. With that in mind, I have a particular interest in paying attention to the $2.00 level underneath where the 200 day EMA currently sits. I think that is an area that could cause a lot of support, but it may get a bit noisy in that general vicinity.
NATGAS Video 13.08.20
Underneath there, the 50 day EMA comes into play as well, near the $1.90 level. All things being equal, the market is likely to see plenty of buyers between those two moving averages, so having said that I am looking towards the daily candlestick’s in order to place a trade. Looking for some type of value to get involved is without a doubt the best way to play this market, because it has certainly shown itself to be explosive to the upside after this most recent move.
That being said, with the bankruptcies out there and of course the falling US dollar, commodities in general are rising so I think natural gas is getting a bit of a boost due to that as well. After we get through the wave of bankruptcies, it will be interesting to see whether or not supply dwindles enough to drive the price of this winter. It looks very likely that this will be very choppy to say the least, but I still favor buying dips.
Gold markets have broken down just a little bit during the trading session on Wednesday, reaching towards the 50 day EMA before recovering again. Now that we are above the $1900 level, it looks like we are ready to continue to go higher. Ultimately, this is a market that I think will go looking towards the highs again, but we needed to scare off the “weak hands” in the marketplace. Furthermore, a lot of this may have been due to the US dollar surging higher during the trading session on Tuesday. We have seen that move pull back just a bit, and that has been reflected here as well.
Gold Price Predictions Video 13.08.20
Having said all of this, it will take several days for the market to regain the confidence to take the highs out, and of course the $2000 level will be slightly psychologically important. However, if we were to break down below the 50 day EMA it is likely that we would drop to the $1800 level next. I do like the idea of buying gold and I think that we are in a longer term cyclical bull market, so I will not be a seller.
I even noted this a few days ago that we could see some type of major sell off, but I was not going to be part of it. Simply collecting profits and then buying when gold is “on sale” makes the most sense. This looks like a very vibrant candlestick that suggests that we are ready to continue going higher if you have the wherewithal to hang on to what will more than likely be a choppy move.
Tesla Inc. (TSLA) is trading higher by more than 8% in Wednesday’s U.S. session after announcing a 5-for-1 stock split, effective for shareholders of record at the close on August 28. The news follows Apple Inc.’s (AAPL)4-for-1 split announcement on July 31, with both actions intended to attract a greater share of young market participants who opened commission-free broker accounts with U.S. stimulus checks earlier this year.
Tesla Announces 5-For-1 Stock Split
Splits don’t change valuation but they can be effective tools to improve sentiment after a stock has posted out-sized gains. The practice was shunned after the Internet bubble broke in 2000, with public corporations seeking institutional ownership by letting stock prices grow to triple and quadruple digits, making shares less attractive to under-capitalized traders. The introduction of speculative capital this year has shifted the paradigm once again, suggesting many high tech companies will follow suit in coming months.
Tesla CEO Elon Musk discussed the future of electric vehicles in a July 26 interview, noting “There’s two billion cars and trucks on the road in the fleet, and there’s a hundred million made per year, roughly. So this is something I often have to remind people of – even if all cars tomorrow were electric and autonomous, it would take 20 years to replace the fleet. So you’ll have this strange situation, kind of like when they had horses and automobiles going down Main Street at the same time for a few decades.”
Wall Street And Technical Outlook
Wall Street has grown more cautious on Tesla after the 4-month 1,400+ point rally, with a ‘Hold’ rating based upon 4 ‘Buy’, 13 ‘Hold’, and a gut-wrenching 11 ‘Sell’ recommendations. Price targets currently range from a low of just $87 to a street-high $2,400, illustrating broad-based conflict about the company’s long-term outlook. The stock is trading around $1,500 after the news, or more than $250 above the median $1,242 target.
Tesla is extremely overbought, to say the least, following an historic rally that’s driven valuation into nosebleed levels. Theoretically speaking, the company will need to post aggressive quarterly growth to support these lofty prices but, as we learned last night, Musk is willing to do what it takes to keep the faithful picking up shares. As a result, it isn’t wise to bet against the EV manufacturer, who has been crushing wave after wave of short sellers in the last 14 months.
EIA has just published its Weekly Petroleum Status Report which showed that crude oil inventories declined by 4.5 million barrels.
This data was in line with yesterday’s API Crude Oil Stock Change report which indicated that crude inventories fell by 4.4 million barrels.
Crude oil imports declined by about 0.4 million barrels per day (bpd) and played a material role in the crude inventory draw.
Meanwhile, gasoline inventories decreased by 0.7 million barrels while distillate fuel inventories decreased by 2.3 million barrels.
Importantly, the U.S. domestic oil production remained in a downside trend and declined from 11 million bpd to 10.7 million bpd.
Previously, U.S. oil production tried to rebound after the blow dealt by the coronavirus pandemic but did not manage to get above 11.1 million bpd.
This is a very good sign for the market since many traders were worried that WTI oil prices above $40 would lead to a material rebound in U.S. oil production. This is not happening. On the contrary, the U.S. oil production is once again under pressure which is bullish for oil.
OPEC Revises Its Oil Demand Outlook
Today, OPEC released its Monthly Oil Market Report which indicated that OPEC decided to revise its estimate of global oil demand growth from -8.9 million bpd to -9.1 million bpd.
OPEC stated that lower economic activity levels in certain non-OECD countries were the main reason for the revision. Brazil and India have so far failed to contain the pandemic so it looks like OPEC expects that problems with coronavirus in these countries will hurt demand for oil.
For this year, OPEC expects oil demand of 90.6 million bpd. In the next year, oil demand is set to increase to 97.6 million bpd.
Interestingly, OPEC expects that non-OPEC supply may grow in the third quarter. Specifically, OPEC noted that U.S. shale oil producers showed signs of restarting output.
The above-mentioned EIA Weekly Petroleum Status Report painted a completely different picture as it highlighted a material decline in U.S. oil production.
For now, oil traders will likely focus on the continued decline in inventory levels. Oil remains in an upside trend, but more positive news about COVID-19 vaccine may be required to push oil to new highs.