Oil Price Fundamental Daily Forecast – US-Iran Deal Uncertainty, Weak Dollar Help Spike Prices Higher

U.S. West Texas Intermediate crude oil and international-benchmark Brent crude oil futures surged to the upside late in the session on Monday as talks between the U.S. and Iran over nuclear issues and the end of oil sanctions stalled, while a weaker U.S. Dollar drove up foreign demand for the dollar denominated asset.

At 19:40 GMT, September WTI crude oil is trading $72.03, up $1.58 or +2.24% and September Brent crude oil is at $74.04, up $1.31 or +1.80%.

Additionally, oil prices have drawn support from optimism over the pace of global COVID-19 vaccinations and an expected pick-up in summer travel. The market has also drawn support from forecasts of limited growth in U.S. oil output, giving OPEC and its allies more power to manage the market in the short-term before a potentially strong rise in shale oil output in 2022.

US – Iran Talks Stall

Negotiations for the nuclear deal took a pause on Sunday after hardline judge Ebrahim Raisi won Iran’s presidential election. Two diplomats said they expected a break to around 10 days.

The U.S. and Iran began in mid-June their sixth round of indirect talks on reviving a 2015 nuclear deal that former U.S. President Donald Trump pulled out of in 2018. Trump reimposed sanctions on Iran’s energy sector, leading refiners in many countries to shun Iranian crude and forcing Tehran to pump well below capacity.

Iran Stores More Oil on Tankers as It Counts Days to Enter Markets

While the pause in U.S.-Iran negotiations may be behind Monday’s upward price spike, there still are some traders who fear a deal between the two countries could bring more oil into the market than previous thought.

According to Reuters, Iran could quickly export millions of barrels of oil it is holding in storage if it reaches a deal with the United States on its nuclear program and has been moving oil into place to prepare for an eventual restart, four traders and industrial sources said.

Traders are also saying that a deal could lead to Iran exporting an extra 1 million barrels per day, or 1% of global supply, for more than six months from its storage facilities.

OPEC Told to Expect Limited US Oil Output Growth for Now

Reuters is reporting that OPEC officials heard from industry experts that U.S. oil output growth will likely remain limited in 2021 despite rising prices, OPEC sources said, giving it more power to manage the market in the short-term before a potentially strong rise in shale output in 2022.

Short-Term Outlook

Monday’s price action indicates that buyers have the ability and the conviction to absorb any short-term weakness even if it’s caused by a stronger U.S. Dollar or the threat of more oil from Iran.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Continue to Plow Higher

WTI Crude Oil

The West Texas Intermediate Crude Oil market has rallied just a bit during the trading session to gain over 1% as market participants have reached towards the highs again. The global economy appears to be reopening, and that of course is going to drive prices higher as it has become somewhat of a “one-way trade.” Ultimately, I like the idea of buying pullbacks and it should continue to respect the $70 level, which of course is a large, round, psychologically significant figure. If we break down below there, the $67.50 level would be supportive as well, as it was the top of the ascending triangle. I believe at this point in time, the market is likely to go looking towards the $77.50 level.

Crude Oil Video 22.06.21

Brent

Brent markets have rallied during the trading session on Monday, to reach towards the $75 level. If we can break above the $75 level, then the market is likely to go looking towards the $80 level. This is the “measured move” of the ascending triangle, and of course we have the 50 day EMA reaching towards the top of the ascending triangle, adding more credence to the idea of the $70 level to be supportive.

It is not until we break down below the bottom of the ascending triangle in either one of these grades that I would be a seller. I do not see that happening anytime soon, and of course with the world waking back up, it makes quite a bit of sense that demand will continue to push this market higher. At this point, I have no interest in shorting anytime soon.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Rebound At The Start Of The Week

Traders Buy Stocks After Sell-Off

S&P 500 futures are gaining ground in premarket trading as traders rush to buy stocks after the recent sell-off.

The yield of 10-year Treasuries has recently made an attempt to settle below 1.36% but lost momentum and rebounded towards 1.44%. It looks that traders rushed to buy U.S. government bonds to increase exposure to safe-haven assets, but optimism prevailed, and yields moved higher.

Meanwhile, the U.S. dollar is losing ground against a broad basket of currencies after the recent rally. Weaker dollar provided some support to precious metals so gold and silver are moving higher at the start of the week.

Cryptocurrencies Dive Amid Crackdown In China

China continued to put pressure on crypto mining and banned mining in Sichuan province. This move triggered a major sell-off in crypto markets. Bitcoin declined towards the support at $32,000 while Ethereum fell below the $2,000 level. Dogecoin was the biggest loser among major cryptocurrencies. Currently, it is trying to settle below the support at $0.2250.

It looks that the recent flight to safety in global markets served as an important catalyst for the current downside move, and traders preferred “safer” alternatives to cryptocurrencies.

It remains to be seen whether the current sell-off in crypto markets will have any notable impact on the stock market, but crypto-related stocks like MicroStrategy are under significant pressure in premarket trading.

WTI Oil Moves Higher After Hardline Candidate Wins Iran Election

WTI oil made an attempt to settle back above the $72 level after judge Ebrahim Raisi, who is under U.S. sanctions, won presidential election in Iran.

Traders bet that Iran nuclear deal negotiations may get more challenging after Raisi’s victory.  However, traders may be using political developments in Iran as an excuse to buy oil at higher levels, while the strongest drivers behind the recent rally are the robust rebound of oil demand and the successful implementation of OPEC+ deal.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Update – Strengthens Over $70.42, Weakens Under $70.02

U.S. West Texas Intermediate crude oil futures are edging higher on Monday, boosted by an improving demand outlook due to the summer driving season and slow progress in talks between the U.S. and Iran regarding nuclear issues and the possible lifting of sanctions that could bring more oil into the market.

At 09:28 GMT, September WTI crude oil futures are trading $70.78, up $0.33 or +0.47%.

Daily September WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $71.99 will signal a resumption of the uptrend. A trade through $61.06 will change the main trend to down.

The minor trend is also up. A trade through $68.05 will change the minor trend to down. This will also shift momentum to the downside. A move through $67.84 will reaffirm the downtrend.

The first minor range is $71.99 to $68.86. The market is currently trading on the strong side of its 50% level at $70.42, making it potential support.

A second minor range is $68.05 to $71.99. Its 50% level at $70.02 is another potential support level. This is followed closely by another 50% level at $69.92. Still another potential support level comes in at $68.29. This is the last potential support before the pair of minor bottoms.

Daily Swing Chart Technical Forecast

The direction of the September WTI crude oil futures contract on Monday is likely to be determined by trader reaction to the pivot at $70.42.

Bullish Scenario

A sustained move over $70.42 will indicate the presence of buyers. If this move generates enough upside momentum then look for the move to possibly extend into $71.99 over the short-run.

Bearish Scenario

A sustained move under $70.42 will signal the presence of sellers. The first downside target is the pivot at $70.02. If this fails then look for a potential acceleration to the downside with the next target last week’s low at $68.86, followed closely by another pivot at $68.29 and a pair of main bottoms at $68.05 and $67.84.

For a look at all of today’s economic events, check out our economic calendar.

Oil Bulls Reign, on Iranian Hard-Line Leader’s Victory

Oil bulls affirmed their grip on the energy market after macros showed a substantial pause on the resumption of supplies from Iran who sits upon 13% of global oil reserves.

At the time of filing this report, the British based oil contract, Brent crude futures posted gains of about 0.4% to trade near $74 a barrel while U.S. West Texas Intermediate futures traded near $72 a barrel, posting gains of about 0.5%.

Both major crude oil benchmarks have recorded four straight weekly gains amid soaring demand, continued supply controls by OPEC+ and U.S. shale producers suggest crude oil use is recovering fast, and nearly at pre-COVID-19 pandemic levels.

Negotiations to resuscitate the Iran nuclear deal went tough on Sunday, as macros revealed Ebrahim Raisi, a hardliner, placed on U.S sanctions won the Iranian presidential election, further added more complexity amid reports on the removal of such sanctions imposed on its leader before any agreement is reached.

Price patterns show oil bulls had earlier been under intense pressure in the early part of 2021 amid reports that a nuclear deal was imminent and Iranian oil would soon flood the fragile oil market with the third wave of COVID-19 hitting hard at key oil buyers like India and Japan.

Still, market pundits predict, pending crude oil supplies from Iran can easily be absorbed by the growing thirst for energy as social mobility and air travels rebound strongly on growing sentiments that energy demand will outstrip supply by as much as 1.5 million barrels a day by the end of this year.

Oil Price Fundamental Weekly Forecast – Traders Eyeing US Dollar, Potential US-Iran Deal;

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished marginally higher last week after being pressured most of the week. The markets were essentially supported by expectations of higher demand and the OPEC+ production cuts.

Prices retreated from a nearly 2-year high after the Federal Reserve moved up the timing of its first rate hikes on Wednesday. This raised fears that the move would slow down the economy and thus, demand for crude oil and gasoline. Traders were also becoming concerned that a U.S.-Iran nuclear deal would lead to increased supply from the rogue nation.

Last week, September WTI crude oil settled at $70.45, up $0.53 or +0.76% and September Brent crude oil closed at $72.73, up $0.62 or +0.85%.

Crude oil prices were also pressured as the dollar strengthened after the U.S. Federal Reserve signaled it might raise interest rates as soon as 2023.

At the end of the week, traders were eyeing fresh coronavirus cases from the U.K. Britain reported its biggest daily rise in new cases of COVID-19 since February 19 on Thursday, according to government figures which showed 11,007 new infections, up from 9,055 the day before.

Crude Inventories Drop, Gasoline Stocks Rise

Last week, both the American Petroleum Institute (API) and the Energy Information Administration (EIA) reported lower crude oil inventories and a rise in U.S. gasoline stocks. According to the EIA, U.S. gasoline supply increased by an unexpected 2 million barrels the week-ending June 11. Analysts forecast gasoline stocks would decline 600,000 barrels.

Weekly Forecast

The surprise last week was the jump in the U.S. Dollar With the Fed announcing a major shift in policy, crude oil traders were caught off-guard since central bank policymakers had been reiterating that rates wouldn’t move up until at least 2024, the rise in consumer inflation was transitory and the pace of the labor market recovery is still too slow.

A strong dollar won’t change the trend to down, but it could cap gains over the short-run while traders adjust their bullish positions.

This week, traders could be surprise by the announcement of a nuclear deal between the US and Iran. Prices could fall sharply if the deal allows Iran to bring its oil to the market. Analysts have said Iran could boost oil supplies by 1 million to 2 million barrels per day (bpd) if sanctions are lifted.

An acceleration in the number of COVID-19 cases in the U.K. could also weigh on prices. However, losses could be offset by a drop in U.S. gasoline stocks due to increased summer driving.

For a look at all of today’s economic events, check out our economic calendar.

Post-Fed Markets. What To Expect Next?

Fundamental analysis

At the same time, the central bank lifted its growth expectations for 2021 to +7%, an outlook far above the anemic GDP growth rates experienced pre-pandemic. Bulls largely want to stay focused on the economic “boom” ahead, believing it will more than offset any near-term inflation headwinds that companies may face in the second half of the year. And there is evidence money may be shifting back into some of the mega-cap growth stocks.

I just worry that the move might be temporary in nature or perhaps just a knee-jerk and a place to park some money until they figure out their next move. The Fed’s more hawkish shift also seems to be providing a further boost to the U.S. dollar, which shot up nearly a full percentage point against a basket of six other major currencies in the ICE U.S. Dollar Index.

Keep in mind, many big-money players have been forecasting a somewhat softer dollar based on the Fed’s extended supports. Obviously, a stronger dollar is a headwind for commodities and that was on display last week with a sea of red across everything from grains to metals and oil.

Oil markets are also feeling some additional downward pressure from the coronavirus surge happening in the UK, which some worry could ripple across the EU and further delay other re-openings.

Data to watch

Housing is in the spotlight in the first half of the week with Existing Home Sales Tuesday and New Home Sales on Wednesday. The housing market has been sending some mixed signals lately as home prices continue to soar, inventories remain at historic lows, and builders struggle with skyrocketing input prices and labor shortages.

Other data includes Durable Goods Orders and the final estimate of third-quarter GDP on Thursday; and Personal Income & Outlays, and Consumer Sentiment on Friday.

SP500 technical analysis

sp500 analysis fed 20 june 2021

While last week SP500 posted a fresh record top at 4258.5 (4267.5 on Jun), bears have returned to the market, aggressively selling futures on Friday and for sentiment to end a sequence of higher weekly lows with losses of 118 Pts from the top. This is negative and with cycles pointing lower, we can see further decline. 4179.0 is an important level to watch if tested and rejected. The supports 4100.5, the May 20th open, 4046.0, the 5-week base, and 4020.0, May’s low trade.

Keep in mind that this could be just a jerk-reaction after the Fed. Also, cycles forecast a potential rally in 2 weeks.

Why The Dollar Matters (A Lot!)

With the recent rally this past week in the dollar, it is important for investors to understand why such a move matters. For those who love charts, this article is for you.

The most obvious and well-known correlation between the dollar and equities is the association of a weak dollar with the outperformance of most commodities and real assets. It is no coincidence the significant gains in commodities over the past 12 months have come during a period of a declining dollar. We can clearly see this inverse relationship in play by comparing the performance of copper and oil against the dollar.

Dollar & copper
Dollar & copper

Dollar & oil

Dollar & oilAn extension of this relationship is how periods of dollar weakness coincide with the relative outperformance of equity markets sectors reliant on economic growth. As we have witnessed over the past year, the falling dollar has resulted in the outperformance of consumer cyclical versus consumer defensive stocks, as well as materials, industrials, small caps and energy stocks outperformance relative to the broad market. Likewise, this period of dollar weakness has seen the underperformance of defensive sectors such as utilities and bonds.

Consumer cyclicals vs defensive
Consumer cyclicals vs defensive

Basic materials vs S&P 500

Basic materials vs S&P 500Industrials vs S&P 500

Industrials vs S&P 500Utilities vs S&P500

Utilities vs S&P500Small Caps vs Large Caps

Small Caps vs Large CapsDollar & bonds

Dollar & bondsFrom a fundamental perspective, these relationships make sense. A stronger dollar is generally a function of a contractionary or disinflationary outlook. During deflationary shocks à la March 2020, dollars are in high demand and act as a safe haven or risk-off asset. Conversely, a weaker dollar is generally a function of economic growth and rising inflation expectations.

What this means is the dollar tends to appreciate when bond yields fall. This comes about due to the safe have characteristics of the dollar. If the economic outlook looks sluggish and appears to be slowing down, we tend to see money flow into dollars, and by extension, we see money flow out of the growth and inflationary dependent sectors and asset classes of commodities, small caps, cyclicals, industrials and materials and into those of a defensive nature.

Perhaps the most well-known implication of dollar strength or weakness is the performance of foreign and emerging markets relative to the US. Emerging markets in particular are inherently cyclical and dependent on the dollar. This is particularly the case for those countries with high levels of US dollar denominated debt or the commodity producing countries.

Emerging markets vs S&P 500
Emerging markets vs S&P 500

I detailed the dollar and emerging markets dynamic in depth in my article arguing the bull case for emerging markets, most of which is detailed as follows:

A rising US dollar causes the domestic currency of emerging economies to fall and inflation to rise amid weaker economic growth. Contrary to a developed economy whose economic growth is generally associated with inflation, being beholden to foreign-denominated debt reverses this dynamic. Higher inflation results in the central bank needing to raise interest rates and sell their foreign exchange reserves to defend their currency from hyperinflating, which acts as a further headwind to economic growth and exacerbates this dynamic in a self-reflexive manner.

These countries are unable to simply print money to monetize the debt, as is commonplace in developed countries whose debt is denominated in their own currency. The governments will then look to use fiscal policy as a means to stimulate, resulting in increasing budget deficits at the same time foreign and domestic capital flees the country for a safer alternative to preserve wealth, resulting in a negative current account balance along with a budget deficit.

Of course, these dynamics work in reverse too when the dollar is falling and create an economic tailwind that results in strong economic growth and asset price appreciation generally superior to developed markets. As the domestic currency strengthens, inflationary pressures fall, allowing the central banks to lower interest rates whilst the economy is booming, spurring lending and reinforcing growth.

At the same time, the governments are not required to run budget deficits, nor are the central banks required sacrifice their foreign currency reserves and run current account deficits to defend their currencies. You could almost think of a rising dollar as a form of quantitative tightening for most emerging markets, whilst a falling dollar could be considered a form of quantitative easing.

Therefore, for one to be willing to bet on the outperformance of EM relative to US equities, one must have a bearish outlook for the dollar.

Is this dollar rally sustainable?

In my view, the dollar has appeared to be in need of a rebound for a few months now. To be clear, we are far from seeing the start of a new trend higher in the dollar, but, as the consensus towards the dollar has been and remains almost exclusively bearish, it is not often we see price action conform to consensus.

Speculators are still betting heavily against a rally in the dollar.

Conversely, speculators are betting heavily on the relative outperformance of the euro. Meanwhile, commercial hedgers (i.e. the smart money) remain long dollars and short euros.

Technically, the coming weeks will be telling for both the dollar and the euro. With a potential head and shoulders bottom forming on the dollar index, and conversely a head and shoulders top for the euro, should these patterns follow through and the dollar move further to the upside, many of the “consensus” inflationary and growth orientated trades in which investors are all in on, may experience a period of underperformance.

A continued rally in the dollar over the coming months may well be a signal the inflation trade has gotten too ahead of itself. I have written previously how this may be the case. What’s more, the bond market also appears to be signaling a pause in this narrative for the time being, as I too mused upon recently. If the dollar does move higher, expect to see reflation trades dip and thus the outperformance of defensives, utilities, bonds and tech.

Regardless of whether we do see a meaningful move higher over the coming months, it is important for investors to understand the implications of such a move, as is the purpose of this article. Whilst a move higher would not bode well for risk assets, it would likely be unsustainable and thus brief.

With US debt to GDP at an all-time high of 130%, US net international investment position (NIIP) of -65% of GDP, lack of foreign investment in treasuries and an economy heavily reliant on the appreciation of equity prices, for mine, policy makers will understand the damage a dollar rally could cause. In the long-term, I do remain in the dollar bear camp. However, we need to see a rally and wash-out of the negative sentiment before the downtrend is able to continue.

Finally, I will leave you with this excellent chart by Julien Bittel, summarizing the relative return of the major equity sectors and asset classes to moves in the dollar.

Source: Julien Bittel, CFA
Source: Julien Bittel, CFA

The Week Ahead – Economic Data and Monetary Policy to Keep the Markets Busy

On the Macro

It’s a quieter week ahead on the economic calendar, with 49 stats in focus in the week ending 25th June. In the week prior, 61 stats had been in focus.

For the Dollar:

Private sector PMIs for June are due out on Wednesday. Expect the services PMI to be the key driver.

The focus will then shift to core durable goods orders and jobless claims figures on Thursday.

At the end of the week, inflation and personal spending numbers wrap things up.

Other stats include finalized 1st quarter GDP numbers, durable goods orders, and finalized consumer sentiment figures. These should have a muted impact on the Dollar, however.

On the monetary policy front, FED Chair Powell testimony will draw interest on Tuesday. FOMC member chatter will also need monitoring in the week.

In the week, the Dollar ended the week up by 2.32% to 92.225.

For the EUR:

It’s a busier week on the economic data front.

Early in the week, consumer confidence figures for the Eurozone will be in focus on Tuesday.

The market attention will then shift to prelim private sector PMIs for France, Germany, and the Eurozone are due out on Wednesday.

Expect plenty of interest in the numbers. Following some weak stats from Germany, however, Germany’s manufacturing PMI will likely have a greater impact on the day.

Through the remainder of the week, the German economy remains in focus.

Business confidence and consumer confidence figures are due out on Thursday and Friday.

From the ECB, President Lagarde is scheduled to speak on Monday, with the ECB Economic Bulletin due out on Thursday.

Both will provide the EUR with direction in the week.

The EUR ended the week down by 2.50% to $1.1863.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

CBI Industrial Trend Orders are due out on Tuesday ahead of prelim private sector PMIs on Wednesday.

Expect the UK’s services PMI to be the key driver.

The main event of the week, however, is the BoE monetary policy decision.

Dissent or hawkish chatter would be needed to give the Pound a boost following the government’s delay on fully reopening the UK.

Away from the economic calendar, COVID-19 news updates will also be in focus. We have seen the Pound struggle of late, as a result of a spike in new Delta strain cases.

The Pound ended the week down by 2.45% to $1.3810.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Retail sales figures are due out on Wednesday. With little else for the markets to consider in the week, expect plenty of influence from the numbers.

Crude oil inventory numbers will also influence mid-week.

The Loonie ended the week down 3.15% to C$1.2465 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a particularly quiet week ahead.

Prelim retail sales figures for May will be in focus on Monday. With no other stats to consider in the week, a larger than expected rise in sales would deliver support.

The Aussie Dollar ended the week down by 3.36% to $0.7479.

For the Kiwi Dollar:

It’s also a quiet week ahead.

Trade data for the 1st quarter will provide direction. The markets will have to wait until Friday for the numbers, however.

The Kiwi Dollar ended the week down by 3.85% to $0.6936.

For the Japanese Yen:

Prelim private sector PMI numbers for June will be in focus on Wednesday. Expect both the services and manufacturing PMIs to draw interest.

The focus will then shift to inflation figures due out on Friday. We don’t expect the numbers to have a material impact on the Yen, however.

The Japanese Yen fell by 0.60% to ¥110.21 against the U.S Dollar.

Out of China

It’s a particularly quiet week ahead, with no major stats to influence market risk sentiment.

While there are no stats to consider, the PBoC will set its Loan Prime Rates on Monday. Any increase in LPRs would catch the markets off-guard.

The Chinese Yuan ended the week down by 0.90% to CNY6.4531 against the U.S Dollar.

Geo-Politics

While there are no major risks to consider on the geopolitical risk front, the markets will need to look out for any rhetoric in the wake of the Iranian Presidential Election. There’s also China, Russia, and North Korea to keep an eye on…

The Weekly Wrap – A Hawkish FED Delivers for the Dollar Bulls

The Stats

It was a busier week on the economic calendar, in the week ending 18th June.

A total of 61 stats were monitored, which was up from 45 stats in the week prior.

Of the 61 stats, 25 came in ahead forecasts, with 26 economic indicators coming up short of forecasts. There were 10 stats that were in line with forecasts in the week.

Looking at the numbers, 26 of the stats reflected an upward trend from previous figures. Of the remaining 35 stats, 26 reflected a deterioration from previous.

For the Greenback, the FOMC policy decision and projections were the key drivers. In the week ending 18th June, the Dollar Spot Index rallied by 2.32% to 92.225. In the previous week, the Dollar had risen by 0.46% to 90.5550.

Out of the U.S

It was a busy start to the week.

Retail sales and wholesale inflation figures drew plenty of attention on Tuesday.

It was a mixed set of numbers, however.

While wholesale inflationary pressures picked up in May, retail sales hit reverse in May.

Industrial production and NY Empire State manufacturing numbers also delivered mixed results on the day.

While industrial production rose further in May, the NY Empire State Manufacturing Index fell from 24.3 to 17.4 in June.

In the 2nd half of the week, jobless claims and Philly FED Manufacturing PMI numbers were in focus.

In June, the Philly FED Manufacturing PMI fell from 31.5 to 30.7 versus a forecasted 31.0.

While the headline index declined, the employment sub-index was on the rise. The sub-index increased from 19.3 to 30.7.

Jobless claims figures disappointed, however.

In the week ending 11th June, initial jobless claims rose from 375k to 412k. Economists had forecast a decline to 359k.

While the stats did draw attention, the FOMC monetary policy decision, press conference, and economic projections were the key drivers in the week.

A more hawkish than expected outlook on the economy and interest rates led to a Dollar rally.

In the equity markets, the NASDAQ slipped by 0.28%, with the Dow and the S&P500 saw falling by 3.45 % and by 1.91% respectively.

Out of the UK

It was a busier week, with employment, inflation, and retail sales in focus.

The stats were skewed to the positive mid-week.

In April, the unemployment rate slipped from 4.8% to 4.7%, with claimant counts falling by 92.6k in May. In April, claimant counts had fallen by 55.8k.

On Wednesday, inflation figures also pointed to a pickup in inflationary pressures. The UK’s annual rate of inflation accelerated from 1.5% to 2.1%, taking inflation beyond the BoE’s objective.

At the end of the week, retail sales figures disappointed, however, ahead of the coming week’s BoE monetary policy decision.

In May, retail sales fell by 1.4%, with core retail sales sliding by 2.1%. Economist had forecast increases of 1.6% and 1.5% respectively.

Adding further downward pressure on the Pound was a continued rise in the Delta variant of the coronavirus.

In the week, the Pound slid by 2.45% to end the week at $1.3810. In the week prior, the Pound had fallen by 0.35% to $1.4107.

The FTSE100 ended the week down by 1.63%, reversing a 0.92% rise from the previous week.

Out of the Eurozone

It was a quieter week.

Industrial production, trade data, and wage growth figures for the Eurozone were in focus.

It was a mixed set of numbers for the EUR.

While industrial production rose by more than expected in April, the Eurozone’s trade surplus narrowed markedly, with wage growth also slowing significantly in the 1st quarter.

The stats had a relatively muted impact on the EUR, however, with the markets focused on the FED in the week.

Late in the week, finalized inflation and wholesale inflation figures for the Eurozone and Germany also failed to materially move the dial.

In May, the annual rate of inflation accelerated from 1.6% to 2.0%, which was in line with prelim numbers. Consumer prices increased by 0.3% in the month of May, which was also in line with prelim figures. In April, consumer prices had risen by 0.6%.

In Germany, the annual rate of wholesale inflation jumped from 5.2% to 7.2% in May. Month-on-month, the producer price index rose by 1.5%, following a 0.8% increase in April.

For the week, the EUR slid by 2.50% to $1.1863. In the week prior, the EUR had fallen by 0.48% to $1.2108.

The CAC40 ended the week down by 0.48%, with the DAX30 and the EuroStoxx600 falling by 1.56% and by 1.19% respectively.

For the Loonie

It was a quiet week. Manufacturing sales figures for April disappointed on Monday. Sales fell by 2.1%, partially reversing a 3.5% jump from March.

Mid-week, inflation figures were skewed to the positive, however. Canada’s annual core rate of inflation accelerated from 2.3% to 2.8% in May.

In the month of May, both core consumer prices and consumer prices were also on the rise.

Other stats in the week included housing sector data and wholesale sales figures that had a muted impact on the Loonie.

In the week ending 18th June, the Loonie slumped by 3.15% to C$1.2465. In the week prior, the Loonie had fallen by 0.61% to C$1.2158.

Elsewhere

It was a particularly bearish week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 18th June, the Aussie Dollar tumbled by 3.36% to $0.7479, with the Kiwi Dollar sliding by 3.85% to $0.6936.

For the Aussie Dollar

It was a quiet week. Employment figures for May were the key stats of the week.

The numbers were positive, with full employment jumping by 97.5k in May, supporting a 115.2k rise in employment.

In spite of a 0.3 percentage point increase in the participation rate, the unemployment rate fell from 5.5% to 5.1%.

While the stats were skewed to the positive, the RBA meeting minutes from Tuesday pressured the Aussie.

The Board stood by its outlook on monetary policy and a likely hold cash rates until 2024 at the earliest.

Following the FOMC’s hawkish outlook on monetary policy, monetary policy divergence sank the Aussie.

For the Kiwi Dollar

It was a relatively quiet week.

GDP numbers for the 1st quarter provided the Kiwi Dollar with much-needed support at the end of the week.

In the 1st quarter, New Zealands’s economy expanded by 1.6%, recovering from a 1.0% contraction from the 4th quarter of last year. Economists had forecast more modest growth of just 0.5%.

The stats were not enough to shift sentiment towards RBNZ monetary policy, however.

For the Japanese Yen

It was a busier week.

Early in the week, finalized industrial production figures for April impressed. In April, industrial production increased by 2.9%, coming in ahead of a prelim 2.5%. Production had rise by 1.7% in March.

Mid-week, trade data failed to meet forecasts, however.

Exports were up by 49.6% in May, year-on-year, falling short of a forecasted 51.3% jump.

Japan’s trade balance slid from a ¥253.1bn surplus to a ¥187.1bn deficit.

In spite of the fall Japan’s trade balance into a deficit, there were marked increases in exports to the U.S, China, and to Western Europe.

At the end of the week, inflation figures for May failed to move the dial. This was in spite of a pickup in inflationary pressure. The annual rate of core inflation accelerated from -0.1% to 0.1% in May.

On the monetary policy front, the BoJ was also in action at the end of the week. There were no major surprises, however.

The Japanese Yen fell by 0.63% to ¥110.210 against the U.S Dollar. In the week prior, the Yen had fallen by 0.13% to ¥109.66.

Out of China

Industrial production, fixed asset investment, and retail sales figures for May were in focus mid-week.

Once more the stats were skewed to the negative, with weaker year-on-year growth than forecasted and than seen in the month prior.

Industrial production was up by 8.8 in May, which was down from a 9.8% increase in April.

Retail sales was up 12.4%, which was down from 17.7% in April, with fixed asset investments up 15.4%. Fixed asset investments had been up by 19.9% year-on-year in April.

In the week ending 18th June, the Chinese Yuan fell by 0.90% to CNY6.4531. In the week prior, the Yuan had fallen by 0.05% to CNY6.3988.

The CSI300 and the Hang Seng ended the week down by 2.34% and by 0.14% respectively.

Oil Gains on OPEC Outlook that U.S. Output Growth Will Slow

Officials at the Organization of the Petroleum Exporting Countries got the U.S. production outlook from industry experts, OPEC sources said. This would give the producer group more power to manage the market before a potential surge in shale output in 2022.

Brent crude futures rose 43 cents, or 0.6% to settle at $73.51 a barrel. U.S. West Texas Intermediate (WTI) crude rose 60 cents, or 0.8% to $71.64 a barrel.

Both benchmarks were headed for a weekly gain of about 1.1%.

“Oil markets are rallying because OPEC is skeptical that the increase in U.S. oil production is going to be enough to change their plans to support prices,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

On Wednesday, Brent settled at its highest price since April 2019 and WTI closed at its highest since October 2018. Gains were capped by lingering concerns about the pandemic and a stronger U.S. dollar, which makes oil more expensive in other currencies.

Sources told Reuters that on Tuesday, officials from OPEC’s Economic Commission Board (ECB) and external presenters attended a meeting focused on U.S. output. OPEC heard from more forecasters on the outlook for 2021 and 2022 at a separate meeting on Thursday.

While there was general agreement on limited U.S. supply growth this year, an industry source said for 2022 forecasts ranged from growth of between 500,000 and 1.3 million barrels per day.

“The general sentiment regarding shale was it will come back as prices go up but not super fast,” said a source at one of the companies that provided forecasts to OPEC.

Higher oil prices have spurred some U.S. energy firms back to the well pad. The oil rig count, an early indicator of future output, rose eight this week to 373, the highest since April 2020, according to energy services firm Baker Hughes Co.

On Thursday, Iran’s top negotiator indicated an agreement was close in talks between Tehran and Washington on reviving the 2015 Iran nuclear deal. This added to pressure on prices.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Noah Browning in London, Sonali Paul in Melbourne and Aaron Sheldrick in Tokyo; Editing by Marguerita Choy and David Gregorio)

Crude Oil Weekly Price Forecast – Crude Oil Markets Continue to Drive Higher

WTI Crude Oil

The West Texas Intermediate Crude Oil market has rallied initially during the course of the week but gave back some of the gains late in the week but at the end of the day we are still very likely to continue to see bullish pressure given enough time. The $70 level should be supportive and most certainly the $67.50 level will be as it is the top of the overall ascending triangle, and the measured move suggests that we could go looking towards the $77.50 level. I think we get there given enough time, but a short-term pullback might be in the cards as the US dollar has been acting out.

WTI Oil Video 21.06.21

Brent

Brent markets have also rallied a bit during the course of the week, reaching towards the $75 level. At this point time, the $75 level is of course a psychologically important figure, but based upon the measured move of the triangle, we should be looking at a move towards the $80 level. I think that any pullback that gets close to the $70 level will be bought into, and just like the West Texas Intermediate market, this may be more or less a function of the US dollar strengthening, thereby making less of those dollars buying a barrel. On the other hand, if we can break above the highs of this candlestick, then we should just start to inflate to the upside very rapidly. Nonetheless, I have no interest whatsoever in trying to short this market, it is far too bullish and of course demand should continue to pick up going forward.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Continue to Build Base

WTI Crude Oil

The West Texas Intermediate Crude Oil market pulled back just a bit during the trading session on Friday but continues to see plenty of support at the $70 level. This is an area that previously was important multiple times, and of course will attract a lot of interest by traders just due to the psychology of it. The ascending triangle underneath actually is found at the $67.50 level, where we had broken out of. Ultimately, it is not until we break down below there and the 50 day EMA that I even worry about the market. That being said though, the market probably goes looking towards the $77.50 level based upon the “measured move” of the ascending triangle.

Crude Oil Video 21.06.21

Brent

Brent markets pulled back just a bit during the course of the trading session on Friday as well, only to turn around and form a bit of a hammer. Ultimately, if we can break above the $75 level it is likely that the Brent market goes looking towards the $80 level which would fulfilled the measured move of the ascending triangle underneath. The 50 day EMA is racing towards the $70 level, and that of course comes into the picture as well. The Brent market of course is looking at the reopening trade with the demand picking up just like other markets and grades of crude oil are. I have no interest in shorting this market, nor any other energy market in the short term. If we break down below the bottom of the ascending triangle, that could change things, but I do not see that happening anytime soon.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Traders Concerned Hawkish Fed May Curtail Demand Growth

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Friday, putting them in a position to post a lower close for the week. Although the main fundamentals remain bullish, traders may be using this week’s hawkish tone in the Federal Reserve monetary policy statement as an excuse to book profits after posting a 17-day rally.

At 13:14 GMT, September WTI crude oil futures are trading $69.98, down $0.35 or -0.50% and September Brent crude oil futures are at $71.91, down $0.38 or -0.53%.

Fed’s Influence on Prices

Oil prices are also being pressured by a stronger U.S. Dollar, which rose as a consequence of the Fed’s actions. A rising dollar tends to be bearish for crude oil prices because it reduces foreign demand for the commodity.

The Fed on Wednesday signaled it would be considering whether to taper its asset purchase program meeting by meeting and brought forward projections for the first post-pandemic interest rate hikes into 2023. The dollar jumped to a two-month high after the Fed comments, en route to its best week in nearly nine months.

The prospect of rate hikes also weighed on the longer-term growth outlook for the economy, which would eventually hurt oil demand.

UK Reports Biggest Daily Rise in COVID Cases Since February 19

In news that could’ve encouraged some oil bulls to book profits, the U.K. reported its biggest daily rise in new cases of COVID-19 since February 19, with government figures showing 11,007 new infections versus 9,055 a day earlier.

Earlier in the week, the spread of the more infectious ‘Delta’ variant of the disease, first identified in India, prompted Prime Minister Boris Johnson on Monday to postpone a planned easing of social distancing rules that had been due for June 21.

Smooth US-Iran Negotiations Weigh on Sentiment

Indirect talks between Tehran and Washington on reviving the 2015 Iran nuclear deal have come closer than ever to an agreement, but essential issues remain to be negotiated, the top Iranian negotiator said on Thursday.

Traders are worried that a deal between the U.S. and Iran will lead to the lifting of sanctions against the rogue nation, and the release of about 1.0 to 1.5 million barrels per day of oil into the global supply. This could put pressure on prices.

Daily Outlook

The longer-term fundamentals remain bullish with the OPEC+ production cuts and the prospect of increasing demand providing the support. Meanwhile, a short-term correction shouldn’t harm the main trend and may actually drive prices into a value area, which would attract new buyers.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Decline As Traders Remain Worried About Rate Hikes

Fed’s Bullard Believes That Fed Will Hike Rates In 2022

S&P 500 futures are down by 1% in premarket trading after Fed’s Jim Bullard stated that the Fed may start raising rates at the end of 2022.

Treasury yields have recently started to rebound after yesterday’s pullback, but they stay well below highs that were reached after Fed meeting.

Meanwhile, U.S. dollar continues to gain ground against a broad basket of currencies, and it looks that it’s a major short squeeze. Stronger dollar is bearish for dollar-denominated stocks, so dollar’s recent move adds to the pressure.

However, it remains to be seen whether the market is ready for a material pullback. Yesterday’s attempt to gain downside momentum was quickly bought, highlighting the strength of the current bullish trend in the market.

Precious Metals Try To Rebound Despite Stronger Dollar

Gold has recently made an attempt to settle back above the resistance at $1800 but lost momentum and pulled back towards $1775. Silver also tried to gain more ground, but its upside move was stopped at $26.50.

It is not clear whether gold and silver will be able to move higher in case the U.S. dollar continues its upside move. Most likely, some traders would like to take positions in precious metals after the strong pullback, but it remains to be seen whether this support will be sufficient enough to push gold and silver to higher levels.

Meanwhile, gold mining stocks are gaining some ground in premarket trading after a brutal sell-off on Thursday.

WTI Declines Towards The $70 Level

WTI oil is currently trying to get to the test of the $70 level as the recent sell-off in commodity markets pushed oil traders to take some profits after the strong rally.

If WTI oil manages to settle below the $70 level, it will gain additional downside momentum which will be bearish for oil-related stocks. I’d note that oil segment suffered a serious sell-off during yesterday’s trading session, and shares of oil majors like Exxon Mobil or BP are under significant pressure in premarket trading.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Update – Close Under $69.92 Forms Potentially Bearish Weekly Closing Price Reversal Top

U.S. West Texas Intermediate crude oil futures are edging lower early Friday as prices continue to be capped by a stronger U.S. Dollar that is limiting foreign demand for the dollar-denominated asset. The greenback is being supported by the prospect of higher interest rates in the United States. Crude is set to finish the week slightly lower after testing a multi-year high earlier in the week.

At 05:19 GMT, September WTI crude oil is trading $69.43, down $0.60 or -0.86%.

The prospect of rate hikes also weighed on the longer-term growth outlook, which would eventually hurt oil demand.

Oil prices also fell after the U.K. on Thursday reported its biggest daily rise in new cases of COVID-19 since February 19, with government figures showing 11,007 new infections versus 9,055 a day earlier.

Finally, the news that negotiations between the U.S. and Iran were going smoothly may have also encouraged some long investors to lighten up their positions.

Daily September WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $71.99 will signal a resumption of the uptrend. A move through $61.06 will change the main trend to down.

The minor trend is also up. A trade through $68.05 will change the minor trend to down. This will shift momentum to the downside. Taking out the minor bottom at $67.84 will confirm the shift in momentum.

The minor range is $68.05 to $71.99. Its 50% level at $70.02 is resistance. Additional resistance is the 50% level at $69.92.

A third minor range is $64.60 to $71.99. Its 50% level at $68.29 is the nearest support.

The short-term range is $61.06 to $71.99. If the minor trend changes to down then look for the selling pressure to possibly extend into its retracement zone at $66.53 to $65.24.

Daily Swing Chart Technical Forecast

The direction of the September WTI crude oil market on Friday is likely to be determined by trader reaction to the pivot at $70.02.

Bearish Scenario

A sustained move under $70.02 will indicate the presence of sellers. Taking out yesterday’s low at $68.86 will indicate the selling is getting stronger with the next downside targets clustered at $68.29, $68.05 and $67.84. The latter is a potential trigger point for an acceleration to the downside with $66.53 to $65.24 the next major target area.

Bullish Scenario

A sustained move over $70.02 will signal the presence of buyers. This could trigger a quick rally into $70.43. Look for sellers on the first test of this level. They are going to try to form a secondary lower bottom.

Taking out $70.43 will indicate the buying is getting stronger with $71.99 the next target.

Side Notes

Some traders may want to use last week’s close at $69.92 as a pivot. Settling under this level will form a weekly closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 week correction.

For a look at all of today’s economic events, check out our economic calendar.

Oil Falls From Multi-Year Highs on Firmer Dollar, Hike in UK COVID Cases

Oil demand worries resurfaced after new coronavirus cases jumped in Britain, while supply concerns over the return of Iranian barrels also weighed on the market.

Traders, however, said Friday’s presidential elections in Iran could scuttle nuclear talks between Washington and Tehran and leave U.S. sanction on Iran’s oil exports in place.

Brent futures fell $1.31, or 1.8%, to settle at $73.08 a barrel, while U.S. West Texas Intermediate (WTI) crude fell $1.11, or 1.5%, to settle at $71.04.

On Wednesday, Brent settled at its highest since April 2019 and WTI at its highest since October 2018. Even though Thursday’s declines were the biggest daily percentage drops since May, both benchmarks were still up over 40% so far this year.

The U.S. dollar strengthened to its highest since mid April against a basket of other currencies after the Fed signaled it might raise interest rates at a much faster pace than assumed.

A firmer greenback makes oil more expensive in other currencies, which could dent demand.

Britain reported its biggest daily rise in new cases of COVID-19 since Feb. 19 on Thursday, according to government figures which showed 11,007 new infections, up from 9,055 the day before.

“This UK surge in COVID cases despite rapid vaccinations will raise many alarms over how quickly the rest of Europe will reopen,” said Edward Moya, senior market analyst at OANDA, noting “crude could be ripe for further profit-taking if more optimistic comments come from the latest round of Iran nuclear talks.”

Indirect talks between Tehran and Washington on reviving the 2015 Iran nuclear deal have come closer than ever to an agreement, but essential issues remain to be negotiated, the top Iranian negotiator said on Thursday.

Iran is heading to presidential polls on Friday, with hardline judiciary chief Ebrahim Raisi among the front runners.

“It is very possible that nuclear talks could fall apart if a deal is not done by August (when) the current reform president Hassan Rouhani will leave the government,” said Bob Yawger, director of energy futures at Mizuho in New York.

Washington has sanctioned Raisi for alleged involvement in executions of political prisoners. His election would make it tougher for the United States and Iran to come to an agreement on Iran’s uranium enrichment that would allow U.S. sanctions on Iran’s oil exports to be lifted.

Analysts have said Iran could boost oil supplies by 1 million to 2 million barrels per day (bpd) if sanctions are lifted.

Another drag on crude prices has been the decline in the U.S. 3-2-1 and gasoline crack spreads – a measure of refining profit margins – to their lowest since February on recent weakness in products markets.

U.S. gasoline stocks increased by an unexpected 2 million barrels last week. Analysts forecast gasoline stocks would decline 600,000 barrels.

For a look at all of today’s economic events, check out our economic calendar.

(Additional reporting by Shadia Nasralla in London and Jessica Jaganathan in Singapore; Editing by Marguerita Choy and David Gregorio)

 

Tech-Heavy Nasdaq Ignores Hawkish Fed News to Advance

The performance of the tech-heavy Nasdaq was in stark contrast to the S&P 500 and Dow, which slumped as investors reacted negatively to the Fedeignoral Reserve’s unexpectedly hawkish message on monetary policy on Wednesday.

Chipmaker Nvidia Corp jumped 5.4%, leading the charge among technology behemoths after Jefferies raised its price target on the stock.

Technology shares, which generally perform better when interest rates are low, powered a rally on Wall Street last year as investors flocked to stocks seen as relatively safe during times of economic turmoil.

The group has come under pressure this year on fears that rising inflation would lead the Fed to hike interest rates sooner than expected. The central bank on Wednesday moved its first projected rate increases from 2024 into 2023.

Still, shares of Apple Inc, Microsoft Corp, Amazon.com Inc and Facebook Inc reversed premarket declines to rise between 1.4% and 2% as investors bet that a steady economic rebound would boost demand for their products in the long run.

“Yes there is rising inflation but the market is focusing more on the positives of improving earnings, robust GDP growth and the wider economy getting stronger,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab in Austin, Texas.

“Today’s action is indicative that the Fed hasn’t said anything that the market didn’t already know.”

The Nasdaq briefly advanced to within 16 points of its lifetime peak achieved on April 29, before pulling back a touch.

By 1:55PM ET, the Dow Jones Industrial Average fell 198.57 points, or 0.58%, to 33,835.1, the S&P 500 gained 0.24 points, or 0.01%, to 4,223.94 and the Nasdaq Composite added 127.04 points, or 0.9%, to 14,166.73.

Interest rate-sensitive bank stocks slumped -3.8% as longer dated U.S. Treasury yields dropped.

The strengthening dollar, another by-product of the previous day’s Fed news, pushed U.S. oil prices down from the multi-year high hit earlier in the week. The energy index, in turn, fell more than 3%, the biggest laggard among the 11 main S&P sectors.

Other economically sensitive stocks including materials and industrials fell 2.4% and 1.5% respectively, as data showed jobless claims rising last week for the first time in more than a month. Still, layoffs appeared to be easing amid a reopening economy and a shortage of people willing to work.

“In the balance of June and into the summer we anticipate continued volatility as we get more signals from economic data, Fed policy and as we get into the earnings season,” said Greg Bassuk, chief executive officer at AXS Investments in New York.

In corporate news, U.S.-listed shares of CureVac NV sank 41.5% after the German biotech said its COVID-19 vaccine was 47% effective in a late-stage trial, missing the study’s main goal.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Shashank Nayar and Medha Singh in Bengaluru; Editing by Sriraj Kalluvila, Anil D’Silva, Maju Samuel and Dan Grebler)

 

Oil Price Fundamental Daily Forecast – Strong Dollar Dragging Down Commodities including Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are down over 2% late in the session on Thursday. Technical factors as well as a strong U.S. Dollar are weighing on prices. Overbought technical indicators are encouraging profit-taking after the markets posted a 17-session rally, while the strong dollar is reducing foreign demand for the dollar-denominated commodity.

At 17:45 GMT, September WTI crude oil futures are trading $69.63, down $1.64 or -2.30% and September Brent crude oil is at $71.94, down $1.65 or -2.24%.

Outside factors are also putting pressure on the markets. On Wednesday, the Federal Reserve signaled it might raise interest rates as soon at 2023. Additionally, buyers are being a little cautious on concerns over a possible U.S.-Iran nuclear agreement. But an upcoming election in Iran on Friday could scuttle the nuclear talks and leave U.S. sanctions on Iran’s oil exports in place.

Dollar Jumps after Fed Pulls Interest Rate Hikes into 2023

The dollar jumped against a basket of currencies on Wednesday and Thursday after the Federal Reserve brought forward its projections for the first post-pandemic interest rate hikes into 2023, citing an improved health situation and dropping a longstanding reference that the crisis was weighing on the economy.

Overbought Technical Conditions Encouraging Profit-Taking

To put it simply, the rallies in WTI and Brent crude may have just run out of steam. Prices may have moved ahead of the fundamentals, which made investors nervous enough to begin trimming positions. Bullish traders could just be looking for value also, growing tired of chasing the headlines. A short-term correction may be necessary to drive prices into a value zone, where the markets will once again attract new buyers.

US-Iran Nuclear Deal Could Be the Wildcard

The U.S. and Iran have been having on and off discussions since April. For months, oil traders have been worrying about new crude supply from Iran coming onto the market. This fear was thought to have been put to bed about two weeks ago when a U.S. official said the lifting of sanctions on Iran may not necessarily mean its oil could come onto the market.

Traders are a little nervous at this time because they aren’t confident in the outcome of the deal. Furthermore, it is very possible that the nuclear talks fall apart. That would probably be the best outcome for higher prices.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Markets Pull Back

WTI Crude Oil

The West Texas Intermediate Crude Oil market gapped lower to kick off the trading session on Thursday, only to turn around and show signs of life again. By doing so, the market looks likely to continue seeing a little bit of a pullback, but I do think that the $70 level will probably cause a bit of psychological support, and most certainly the $67.50 level will as the top of the triangle sits right at that level. That being said, I would anticipate a lot of “market memory” coming into play here. Furthermore, I also believe that it is only a matter of time before value hunters come back into this market, because quite frankly demand is going to continue picking up.

Crude Oil Video 18.06.21

Brent

Brent markets also got absolutely crushed during the trading session, but at the end of the day we still have plenty of support underneath that should come into play. Quite frankly, this is a complete overreaction by algorithmic traders more than anything else, and despite the fact that it has been rather brutal, the reality is that the market freaks out about once a month these days, so I am going to take a guess and say this is our time for the latest freak out. The $70 level underneath should be massive support, and that assumes that we can even get there. The demand for crude oil is going to continue to pick up regardless of what the Federal Reserve does, so it is probably only a matter of time before value hunters come back in and pick this market up. Simply standing out of the way is probably the best way to trade this market.

For a look at all of today’s economic events, check out our economic calendar.