Crude Oil Price Update – Testing More than Two-Year High after Reversing Earlier Losses

U.S. West Texas Intermediate crude oil futures are trading higher late in the session on Tuesday after reversing earlier losses. The market is also testing its highest level in more than two years after the top U.S. diplomat said that even if the United States were to reach a nuclear deal with Iran, hundreds of U.S. sanctions on Tehran would remain in place.

That could mean additional Iranian oil supply would not be re-introduced into the market soon, which lifts one of the worries that may have been weighing on prices earlier in the session.

At 20:03 GMT, July WTI crude oil is trading $70.23, up $1.00 or +1.44%. This is up from an intraday low of $68.47.

Daily July WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed when buyers took out Monday’s closing price reversal top at $70.00. A trade through $61.56 will change the main trend to down.

The minor trend is also up. The new minor bottom is $68.47. A trade through this level will change the minor trend to down and shift momentum to the downside.

The minor range is $65.25 to $70.27. Its retracement zone at $67.76 to $67.17 is the nearest support.

The main range is $61.56 to $70.27. Its retracement zone at $65.92 to $64.89 is controlling the near-term direction of the market.

Both retracement zones will move up as the market moves higher.

Daily Swing Chart Technical Forecast

The direction of the July WTI crude oil market into the close on Tuesday will be determined by trader reaction to $69.23.

Bullish Scenario

A sustained move over $69.23 will indicate the presence of buyers. Taking out the intraday high at $70.27 will indicate the buying is getting stronger. This could create enough upside momentum to drive the market into $72.00.

Bearish Scenario

A sustained move under $69.23 will signal the presence of sellers. This could trigger a break into the minor bottom at $68.47. If this price level fails as support then look for the selling to possibly extend into the minor support zone at $67.76 to $67.17.

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

Crude Oil Price Forecast – Crude Oil Markets Continue to Look Bullish

WTI Crude Oil

The West Texas Intermediate Crude Oil market fell initially during the trading session on Tuesday but has seen a significant amount of buying pressure come back into the marketplace again. That being said, the market is likely to continue reaching towards the $70 level again. The $70 level is a large, round, psychologically significant figure that a lot of people will pay close attention to, but if we can break above there then it is likely that the market goes looking towards the $75 level. To the downside, I still see plenty of support based upon the $67.50 level which is the top of the ascending triangle that we had recently broken out of.

Crude Oil Video 09.06.21

Brent

Brent markets have pulled back initially during the trading session on Tuesday, as we had reached towards the $70 level. The $70 level was the top of the descending triangle that we had been forming, and as a result it looks like we are going to continue to see buyers on these dips, perhaps reaching towards the $72.50 level and then eventually the $75 level. All things being equal, this is a market that is in a bullish run, and then could perhaps go looking towards the $80 level based upon the “measured move” of the ascending triangle itself, so therefore I think there is a high probability that we get there given enough time. All things being equal, the 50 day EMA has offered quite a bit of dynamic support, and therefore that is where I define the trend as either being intact or not, as so many people pay close attention to it.

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

Oil Price Fundamental Daily Forecast – Short-Term Setback May Be Sign Price is Ahead of Fundamentals

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Tuesday, but well off its lows. The move represents continuation selling pressure following yesterday’s technically bearish closing price reversal chart pattern. The fundamentals haven’t changed, which suggests the price action is probably related to profit-taking.

At 13:38 GMT, July WTI crude oil is at $69.08, down $0.15 or -0.22% and August Brent crude oil is at $71.24, down $0.25 or -0.35%.

We’re not too surprised by today’s pullback. After all, WTI prices reached $70 a barrel last week, which some analysts believe will be a fair price later in the year, once the economy is running on nearly all cylinders, so let’s just say the market may have gotten a little ahead of itself and a correction was necessary.

Several other factors may also be encouraging bullish traders to lighten up on the long side. They include the renewed talks between the United States and Iran, a drop in China’s crude imports and a stronger U.S. Dollar.

Negotiations between the U.S. and Iran opens up the possibility of the lifting of sanctions on the rogue nation and the release of about 500,000 to 1 million barrels of oil per day.

Data showing China’s crude imports were down 14.6% in May on a year basis also weighed on prices. Heavy Chinese refinery maintenance in May also contributed to the decline.

“China was taking advantage of low oil prices a year ago, so the base is uncharacteristically high,” oil brokerage PVM noted.

A stronger U.S. Dollar is a possible threat to foreign demand because oil is a dollar-denominated commodity. The dollar could strengthen over the near-term if next week the Federal Reserve announces that it will be considering tapering of bond-buying stimulus program.

Short-Term Outlook

Later today at 20:30 GMT, the American Petroleum Institute (API) will release its latest crude oil and fuel inventories report. Traders are looking for a drawdown. Of major importance, in my opinion, will be the gasoline inventories number. Since the U.S. summer driving season started on May 31, traders are expecting to see a drawdown in gasoline inventories because of stronger demand.

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

Stocks Gain Ground As Treasury Yields Decline

Stocks Look Ready To Test New Highs

S&P 500 futures are gaining some ground in premarket trading as traders stay bullish on stocks ahead of the release of key inflation data on Thursday.

There are no market-moving reports scheduled to be released on Tuesday and Wednesday, although traders will take a look at trade balance data and JOLTs Job Openings report today.

Treasury yields are moving lower which means that bond traders stay confident ahead of the inflation report. The yield of 10-year Treasuries managed to settle below the 50 EMA at 1.58% and is currently trying to settle below 1.53%.

Lower yields are bullish for tech stocks which are moving higher in premarket trading despite the recent G7 tax deal which is aimed at tech giants.

WTI Oil Pulls Back After Facing Resistance At $70

WTI oil failed to settle above the resistance at $70 and pulled back below the $69 level. There is no clear catalyst for the move, and it looks that traders decided to take some profits off the table.

Today, oil traders will focus on API Crude Oil Stock Change report which is expected to show that crude inventories declined by 3.58 million barrels. In case crude inventories keep moving lower, oil will have a good chance to get above the $70 level as OPEC+ deal continues to support the market while oil demand is rising due to the rebound of the world economy.

Crypto Market Is Under Pressure As Bitcoin Breaks Below Key Support At $35,000

Falling yields and general bullish mood on many markets failed to provide any support to cryptocurrencies which continue to move lower. Bitcoin managed to settle below the key support at $35,000 and is trying to develop additional downside momentum.

At this point, it is not clear whether the continuation of the current downside move in crypto markets will be bullish for stocks as crypto traders may be reluctant to transfer funds to the stock market, but stock traders should still keep an eye on the developments in crypto markets.

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

Oil Drops Again on Doubts Over Demand Rebound

By Aaron Sheldrick

Brent crude was down 49 cents, or 0.7%, at $71.00 a barrel by 0643 GMT, after declining 0.6% overnight. U.S. oil was off by 44 cents, or 0.6%, at $68.79 a barrel, having dropped by 0.6% in the previous session.

“Chinese oil imports at a five-month low … would tend to confirm weakness in the Asia market,” said Bob Yawger, director of energy futures at Mizhuo Securities.

China’s crude imports were down 14.6% in May, from a high level a year earlier, with daily arrivals at the lowest level this year, as maintenance at refineries limited demand for oil purchases.

Crude prices have risen in recent weeks, with Brent up by nearly 40% this year and WTI gaining more than that, amid expectations of demand to return as some countries succeed in vaccinating populations against COVID-19.

Restraint on supply by the Organization of the Petroleum Exporting Countries and allies has also helped buttress prices.

But major oil importers like India have been going through waves of infections that continue to threaten the expected pickup in global demand in the second half of this year.

“Crude prices are beginning to struggle as demand in Europe and India faces headwinds,” said Avtar Sandu, senior manager commodities at Phillip Futures in Singapore.

(Reporting by Aaron Sheldrick; Editing by Muralikumar Anantharaman)

Crude Oil Price Forecast – Crude Oil Markets Pull Back to Kickoff Week

WTI Crude Oil

The West Texas Intermediate Crude Oil market has rallied just a bit during the course of the early hours on Monday, but then pulled back from the crucial $70 level. The $70 level of course is a large, round, psychologically significant figure, and therefore it makes a certain amount of sense that we were to fall from there. After doing so, I think that we saw plenty of support though, and that is something worth paying attention to. With this being the case, I think that dips will continue to be bought into, as we have seen demand forecasts continue to pick up.

Crude Oil Video 08.06.21

Brent

Brent markets have initially rally during the course of the trading session on Monday but then pulled back towards the $71 level. There is also significant support underneath near the $70 level, and therefore it is likely that the large, round, psychological significance of the number could come into play, and of course the fact that the market has a significant amount of resistance there that had recently been broken through.

That being said, the market is more than likely going to see a significant amount of “market memory” going forward. All things been equal, the market is likely to continue to go looking towards the $75 level, as demand should be picking up with major economies around the world opening up. In the short term, we may get a pullback, but I look at that as a potential buying opportunity and what should be a very strong move of the course of the next couple of weeks.

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

Opec Chief, in Upbeat Oil Outlook, Sees Oil Stocks Falling Further

Oil stocks in developed world nations fell by 6.9 million barrels in April, Mohammad Barkindo said in a virtual appearance at the Nigeria International Petroleum Summit, 160 million barrels lower than the same time one year ago, making the figure public for the first time.

“We expect to see further drawdowns in the months ahead,” he said.

The Organization of the Petroleum Exporting Countries and allies – known as OPEC+ – decided in April to return 2.1 million barrels per day (bpd) to the market from May through July. The producers stuck to that decision at a meeting last week, sparking a rise in oil prices.

“The market has continued to react positively to the decisions we took, including the upward adjustments of production levels beginning in May this year,” he said.

While he noted that vaccine rollouts and the “massive fiscal stimulus” aided an upbeat outlook, he said uneven global vaccine availability, high inflation and continued COVID-19 outbreaks were continued risks to oil demand.

OPEC+ complied with 114% of agreed output curbs in April, Barkindo said.

The group cut output by a record 9.7 million bpd last year as demand collapsed when the COVID-19 pandemic first struck. As of July, the curbs still in place will stand at 5.8 million bpd.

During a later panel discussion at the conference, he added that while OPEC did not deny climate change, the global economy still needs oil.

“We encourage all our member countries to continue to invest in renewables but also to continue to meet the demand for hydrocarbons,” he said.

(Reporting By Alex Lawler and Libby George; editing by David Evans, Kirsten Donovan)

Stocks Mixed After G7 Countries Reach Historic Tax Deal

G7 Countries Agree To A Minimum Global Corporate Tax Rate

S&P 500 futures are swinging between gains and losses in premarket trading while traders evaluate their next steps after the historic G7 tax deal.

Over the week, G7 countries agreed to a minimum global corporate tax rate of at least 15%. The details of the deal would have to be negotiated over the upcoming months, and G7 countries will have to convince the rest of the world to join the deal.

The deal is viewed as a way to tax international tech giants, although it will have a significant impact on most industries. Interestingly, stocks like Apple or Facebook are mostly flat in premarket trading, and it looks that traders will wait for the upcoming negotiations before coming up with final conclusions about the ultimate impact of the new tax deal.

U.S. Dollar Remains Flat Despite Yellen’s Comments

The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, remains close to the psychologically important 90 level despite comments from Treasury Secretary Janet Yellen that higher rate would be “a good thing”.

Yellen has recently stated that a slightly higher interest rate environment would be beneficial for the society. Yellen has been very dovish in the previous months, and this sudden change of tone could have had an impact on currency dynamics.

However, it looks that traders believe that Fed Chair Jerome Powell will keep rates at the bottom for as long as he can which is bearish for the American currency and bullish for stocks.

WTI Oil Tries To Settle Above The $70 Level

WTI oil has recently managed to settle above the $69 level and continues to move higher as traders focus on rising oil demand and the successful implementation of OPEC+ deal.

WTI oil has already made an attempt to settle above the $70 level but lost momentum and pulled back closer to $69.50. The oil market remains bullish, and it looks that oil may soon get to another test of the $70 level. In this light, energy-related stocks have a good chance to start the week on a strong note.

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

Subdued Fund Buying Despite Strong Commodity Gains

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

The below summary highlights futures positions and changes made by hedge funds across commodities, forex and financials up until last Tuesday, June 1. A week that saw S&P 500 trade mostly sideways near its record high while the technology sector lost steam. Treasury yields rose ahead of jobs data with the market pondering for how long the Fed can continue adding support amid rising inflation. The dollar held steady while the commodity sector recovered strongly from the May correction.

Commodities

The commodity sector saw buyers return following the May correction with the Bloomberg Commodity index rising 3%. All sectors apart from precious metals and livestock recorded strong gains led by crude oil, copper, corn and coffee. In response to these developments hedge funds and large money managers increased bullish bets across 24 major commodity futures by 3% to 2,358k lots.

Given the strength of the recovery a relatively small increase that was led by crude oil (25k), gas oil (17k), natural gas (+11.7k), corn (21.9k) and sugar (12.5). Other contracts such as copper (-6.3k) and both wheat contracts (-5.7k) were sold despite recording strong price gains. Potentially a sign that investors despite being dictated by the price action to be long are feeling somewhat uncomfortable with prices at multi-year highs and breakeven yields (inflation) that has been drifting lower during the past three weeks.

Energy

Most of last week’s commodity buying was concentrated in the energy sector, most noticeable crude oil and gas oil. OPEC’s bullish demand outlook for the second half combined with the OPEC+ groups ability to control the price, helped drive Brent above $70 while WTI reached levels last seen in 2018. In response to these developments hedge funds increased their combined crude oil net long by 25.2k lots to 649.5k, a three week high but still some 88k below the recent peak in February.

While the overall increase in both WTI and Brent was primarily driven by fresh buying, the bulk of the buying occurred in WTI. This in response to tightening US market amid increased demand for fuel and low stocks at a time where production is expected to show a much slower growth trajectory than the one we witnessed during previous cycles of rising prices.

Agriculture

Despite recovering strongly from the late May correction, only small changes were seen in soybeans and wheat. Corn received most of the attention with the 11% price spike driving a 21.8k lots increase, mostly due to short covering with potential buyers showing a degree of hesitancy as we move into the US growing season. In soft commodities, buying benefitted sugar, cocoa and coffee, and just like corn the net buying in coffee was primarily due to the short covering with buyers hesitating chasing the 7% rally seen during the week.

Metals

Gold buying ran out of steam with long accumulation slowing to just 2.9k lots, a far cry from the 61.3k lots that was net bought the previous three weeks. Having surged higher by 240 dollar since early April on a combination of technical buying and short-covering from large trend following funds, the lack of fresh buying last week could indicate that this initial demand has now been met. Also worth noting the reporting week up until last Tuesday did not take into account the US economic data related price swings that hit the market towards the end of last week. At 129k lots, the gold long remains well below the most recent 284k lots peak from March last year.

Elsewhere in the metal space, silver longs were reduced for a second week while copper selling extended to a fourth week. During this time the net long has slumped by 58% to just 27.6k, the lowest bet on rising copper prices since last June when the rally had only just started to gather momentum.

Latest: Gold trades softer in early trading following an end of week rollercoaster ride where prices first slumped on emerging profit-taking, only to bounce back on Friday following what looked like “Goldilocks” US payroll date. Gold’s so far shallow correction following the strong rally since early April potentially highlighting the risk that all is not done yet on that front. The first key downside support level that will determine the underlying strength of the market is the 200-day moving average at $1842. Focus on the dollar and whether yields can maintain their Friday drop, President Biden’s spending plan and the market reaction to the G7 tax proposal.

Forex

In forex, the flows in the week to June 1 were mixed while the overall sentiment was still skewed towards additional dollar selling. The net short against ten IMM futures and the Dollar Index reached a 12-week high at $17.7 billion after speculators net sold $900 million. Despite trading softer on the week, speculators continued to buy euros (5.3k lots) with buying also seen in JPY (3k), CAD (3.9k) and CHF (1.5k), while selling reduced the sterling long by 6.5k lots.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other
Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other
Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

Crude Oil Price Update – Close Under $69.62 Forms Potentially Bearish Closing Price Reversal Top

U.S. West Texas Intermediate crude oil futures are trading lower on Monday, putting the market in a position to form a potentially bearish closing price reversal top, which could trigger the start of a minimum 2 to 3 day correction.

The catalysts behind the selling pressure are the prospect of higher Iranian exports and psychological resistance at $70.00.

At 09:55 GMT, July WTI crude oil is trading $69.19, down $0.43 or -0.62%. This is down from an intraday high of $70.00.

Helping to dampen concerns over renewed negotiations between the U.S. and Iran that could lead to increased supply are increased demand expectations due to the reopening of U.S. and European economies.

Daily July WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high of $70.00 will signal a resumption of the uptrend.

A trade through $61.56 will change the main trend to down. This is highly unlikely, however, due to the prolonged move up in terms of price and time, the market is ripe for a closing price reversal top. If confirmed, this would change the main trend to down, but it will shift momentum for at least 2 to 3 days.

The minor trend is also up. A trade through $65.25 will change the minor trend to down. This will also indicate a shift in momentum.

The minor range is $65.25 to $70.00. Its retracement zone at $67.63 to $67.06 is the first downside target.

The main range is $61.56 to $70.00. Its retracement zone at $65.78 to $64.78 is the second downside target.

Daily Swing Chart Technical Forecast

The direction of the July WTI crude oil market on Monday is likely to be determined by trader reaction to $69.62.

Bullish Scenario

A sustained move over $69.62 will indicate the presence of buyers. Taking out $70.00 will indicate the buying is getting stronger with $72.00 the next potential upside target.

Bearish Scenario

A sustained move under $69.62 will signal the presence of sellers. If this move creates enough downside momentum then look for a near-term move into the minor retracement zone at $67.63 to $67.06. Since the main trend is down, look for buyers on a test of this area.

Side Notes

A close under $69.62 will form a closing price reversal top. If confirmed, look for the selling to possibly extend into $67.63 to $67.06 over the short-term.

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

Oil Price Fundamental Weekly Forecast – Renewed US-Iran Negotiations Could Provide Short-Term Pressure

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures closed nearly 5% higher last week, boosted by bullish expectations for demand as the global economy reopens, confidence in OPEC+’s ability to balance supply and stabilize prices and the lack of progress in U.S. – Iran nuclear negotiations. Conditions could change this week, however, with the U.S. and Iran scheduled to return to the negotiations table.

Last week, July WTI crude oil settled at $69.62, up $3.30 or +4.98% and August Brent crude oil finished at $71.89, up $3.17 or +4.41%.

Bullish Factors

The consensus among market forecasters, including the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is that oil demand will exceed supply in the second half of 2021, which has spurred the recent run in prices.

OPEC+ data shows that by the end of the year oil demand will be 99.8 million barrels per day (bpd) versus supply of 97.5 million bpd.

The American Petroleum Institute (API) on Wednesday reported a draw in crude oil inventories of 5.36-million barrels for the week-ending May 28. Analysts had predicted a draw of 2.114-million barrels for the week.

U.S. crude inventories fell more than expected last week the Energy Information Administration said on Thursday. Crude inventories fell by 5.1 million barrels in the week ended May 28, compared with analysts’ expectations for a decrease of 2.4 million barrels.

Potentially Bearish Factors

There are three factors that could help put in a short-term top:  Another build in gasoline stocks, renewed concerns over the pace of global vaccinations and a surprise deal between the U.S. and Iran.

All will be looked upon as short-term events, but initially, the news will give traders an excuse to book profits and lighten up long positions.

The API reported a build in gasoline inventories of 2.51-million barrels for the week-ending May 28 – compared to the previous week’s 1.986-million-barrel draw. Analysts had expected a 1.385-million-barrel draw for the week.

Fuel stocks rose in a pre-holiday rebound from drawdowns that occurred during the Colonial Pipeline outage, the Energy Information Administration said on Thursday. Gasoline stocks rose by 1.5 million barrels, contrary to expectations for a 1.5 million-barrel drop. Gasoline product supplied, a measure of demand, fell 3.5% to 9.1 million barrels per day.

Weekly Outlook

The U.S. and Iran are expected to open up negotiations this week. That news may be enough to limit gains, while the announcement of an actual deal could be bearish over the short-run.

A consensus of traders agree that by the time Iran is able to rev-up its production, demand will have increased enough to offset the extra supply. Furthermore, OPEC+ is likely to make adjustments to its production schedule to offset the increased Iranian supply. Increased Iranian oil production could bring as much as 500,000 to 1 million barrels of oil per day to the market once sanctions are lifted.

Furthermore, in the United States, the number of oil rigs operating fell for the first time in six weeks. This indicates that U.S. drillers are cutting back on production, which helps reduce the risk of a supply glut in the global oil market later this year.

In conclusion, the threat of more supply from Iran could initially drive prices lower, but since the extra supply is likely to be absorbed by more demand, the weakness is likely to be short-lived.

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

The Week Ahead – Economic Data, the BoC, and the ECB to Keep the Markets Busy

On the Macro

It’s a quieter week ahead on the economic calendar, with 42 stats in focus in the week ending 11th June. In the week prior, 80 stats had been in focus.

For the Dollar:

Early in the week, trade data and JOLT’s job opening figures are due out on Tuesday. With continued focus on labor market conditions, expect the job opening figures to be key.

The markets will then need to wait until Thursday for inflation and jobless claim figures.

Following the core PCE price index figures for April, another pickup in inflationary pressure would raise further uncertainty over FED policy.

Labor market conditions will need to continue to improve, however, to justify a move.

Initial jobless claims would, therefore, need to take a tumble to fuel speculation of a near-term move.

In the week, the Dollar ended the week up by 0.12% to 90.136.

For the EUR:

It’s a relatively busy week on the economic data front.

Early in the week, the German economy will be in focus.

Factory orders, industrial production, and trade data are due out Monday through Wednesday.

ZEW Economic Sentiment figures for Germany and the Eurozone on Tuesday will also influence.

In the 2nd half of the week, stats are on the lighter side, leaving the ECB monetary policy decision as the main event on Thursday.

Following assurances from the ECB doves of unwavering support, the markets will be looking for any talk of a tapering to the asset purchasing program.

The ECB’s outlook on inflation and economy will also be key, however.

Barring a marked revision from prelim figures, finalized GDP numbers for the Eurozone should have a muted impact on the EUR early in the week.

The EUR ended the week down by 0.21% to $1.2167.

For the Pound:

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

Early in the week, BRC retail sales figures for May will be in focus. With the UK continuing to reopen, we can expect Pound sensitivity to the numbers.

At the end of the week, trade data and industrial and manufacturing production figures for April will draw interests.

While trade data will influence, expect production figures to be key.

Away from the economic calendar, the markets will also be keeping an eye on COVID-19 news…

The Pound ended the week down by 0.22% to $1.4157.

For the Loonie:

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

On the economic data front, trade data will draw interest on Tuesday. With little else for the markets to focus on, expect plenty of influence from the data.

The main event of the week, however, will be the BoC monetary policy decision.

With the markets expecting the BoC to stand pat on policy, it will come down to the BoC’s outlook on growth. Last time around, the BoC delivered an unexpected boost to the Loonie.

Monthly reports from OPEC and the IEA and the inventory numbers will also provide direction, however.

The Loonie ended the week down 0.07% to C$1.2084 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a quieter week ahead.

Business and consumer confidence figures are due out on Tuesday and Wednesday.

With business investment and consumer spending key to a sustained economic recovery, both sets of numbers will influence.

The Aussie Dollar ended the week up by 0.35% to $0.7739.

For the Kiwi Dollar:

It’s also a relatively quiet week ahead.

Electronic card retail sales and Business PMI numbers are due out. Following the more hawkish than expected RBNZ, positive numbers would deliver another Kiwi boost.

The Kiwi Dollar ended the week down by 0.50% to $0.7214.

For the Japanese Yen:

Finalized GDP numbers for the 1st quarter are due out on Tuesday. Barring a marked revision from prelim, however, don’t expect too much influence from the numbers.

At the end of the week, the BSI Large Manufacturing Conditions Index figures for the 2nd quarter will draw interest, however.

The Japanese Yen rose by 0.30% to ¥109.52 against the U.S Dollar.

Out of China

Trade data for May will provide the broader markets with direction at the start of the week.

Recent economic data from China has suggested a topping out…

On Wednesday, inflation figures will also influence. While the markets are expecting a further pickup in inflation, a marked acceleration would test support for riskier assets.

The Chinese Yuan ended the week down by 0.42% to CNY6.3953 against the U.S Dollar.

Geo-Politics

There are no major risks to consider in the week ahead.

As always, however, the markets will need to continue monitoring chatter from Capitol Hill and Beijing.

The Iranian presidential election is also nearing…

The Weekly Wrap – U.S Labor Market Data Gyrates the Global Financial Markets

The Stats

It was a particularly busy week on the economic calendar, in the week ending 4th June.

A total of 80 stats were monitored, following 41 stats from the week prior.

Of the 80 stats, 48 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 5 stats that were in line with forecasts in the week.

Looking at the numbers, 49 of the stats reflected an upward trend from previous figures. Of the remaining 31 stats, 26 reflected a deterioration from previous.

For the Greenback, economic data from the U.S and FOMC chatter continued to be the main area of focus. In the week ending 4th June, the Dollar Spot Index rose by 0.12% to 90.136. In the previous week, the Dollar had risen by 0.02% to 90.031.

Out of the U.S

It was a quiet start to the week, with the U.S markets closed in recognition of Memorial Day on Monday.

On Tuesday, the ISM Manufacturing PMI rose from 60.7 to 61.2, supporting the market optimism towards the economic outlook.

The markets then needed to wait until Thursday and Friday for the key stats of the week.

ADP nonfarm employment change and weekly jobless claims were in focus along with the market’s favored ISM Non-Manufacturing PMI figures for May.

In May, nonfarm payrolls surged by 978k according to the ADP, coming in well ahead of a forecasted 650k increase. In April, nonfarm payrolls had risen by 654k.

Initial jobless claim figures also impressed. In the week ending 28th May, initial jobless claims fell from 405k to 385k. Economists had forecast a decline to 390k.

Service sector PMI numbers were also positive, with the ISM Non-Manufacturing PMI climbing from 62.7 to 64.0. Economists had forecast an increase to 63.0.

At the end of the week, it was another story, however.

Nonfarm payrolls increased by just 559k in May, falling well short of the ADP’s figures. Economists had forecast a 650k increase following April’s modest 278k rise.

A fall in the participation rate and increase in payrolls supported a fall in the unemployment rate.

In May, the U.S unemployment rate fell from 6.1% to 5.8%. This was not enough, however, to soften the impact from the disappointing NFP numbers…

In the equity markets, the NASDAQ rose by 0.48%, with the Dow and the S&P500 seeing gains of 0.66% and 0.61% respectively.

Out of the UK

It was a relatively quiet week, with finalized private sector PMIs for May in focus.

The stats were mixed in the week. In May, the manufacturing PMI rose from 60.9 to 65.6. While up from April, this was down from a prelim 66.1.

On Thursday, service sector PMI numbers provided Pound support.

In May, the services PMI rose from 61.0 to 62.9, which was up from a prelim 61.8.

Construction PMI figures from Friday were also out but had a muted impact on the Pound.

While the stats were Pound positive, concerns over new COVID-19 strains identified in the UK weighed on the Pound.

In the week, the Pound fell by 0.22% to end the week at $1.4157. In the week prior, the Pound had risen by 0.27% to $1.4188.

The FTSE100 ended the week up by 0.66%, following a 0.06% rise from the previous week.

Out of the Eurozone

Private sector PMIs, and German and Eurozone unemployment and retail sales figures were in focus.

Early in the week, manufacturing sector PMI numbers for May impressed. The Eurozone’s PMI hit a new record high. The Netherlands, Italy, Ireland, and Austria also logged record highs in the month.

Unemployment figures were also positive. In April, the Eurozone’s unemployment rate fell from 8.1% to 8.0%. In Germany, unemployment fell by a larger than expected 15k to leave the unemployment rate unchanged at 6.0% in May.

Mid-week, retail sales figures from Germany did disappoint, however, with sales down 5.5% in April. In March, retail sales had risen by 7.7%.

In the 2nd half of the week, service sector activity and retail sales figures for the Eurozone were in focus.

For May, the Eurozone’s Composite PMI came in at 57.1. This was up from an April 53.8 and a prelim 56.9.

At the end of the week, Eurozone retail sales figures had a muted impact on the EUR following weak numbers from France and Germany.

For the week, the EUR fell by 0.21% to $1.2167. In the week prior, the EUR had risen by 0.08% to $1.2192.

The DAX30 rose by 1.11%, with CAC40 and the EuroStoxx600 ending the week up by 0.49% and by 0.78% respectively.

For the Loonie

It was a busy week. Early in the week GDP numbers for the 1st quarter were in focus.

Month-on-month, the economy expanded by 1.1% in March, coming in ahead of a forecasted 1.0%. In February, the economy had expanded by a more modest 0.4%.

Quarter-on-quarter, the economy expanded by a further 1.4%, following 2.2% growth in the 4th quarter of last year.

At the end of the week, Ivey PMI and employment figures were in focus.

In May, the unemployment rate ticked up from 8.1% to 8.2%, driven by a 68k fall in employment. In April, employment had tumbled by 207.1k.

Mid-way through the 2nd quarter, the Ivey PMI provided some support, however. In May, the Ivey PMI climbed from 60.6 to 64.7.

Other stats included current account, RMPI, and building permit numbers that had a muted impact on the Loonie.

In the week ending 4th June, the Loonie slipped by 0.07% to C$1.2084. In the week prior, the Loonie had fallen by 0.08% to C$1.2076.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 4th June, the Aussie Dollar rose by 0.35% to $0.7739, while the Kiwi Dollar fell by 0.50% to $0.7214.

For the Aussie Dollar

It was a busy week.

Company gross operating profits, 1st quarter GDP and trade figures were key stats in the week.

Gross operating profits fell by a further 0.3% in the 1st quarter, following a 4.8% slide from the 4th quarter.

On the positive, however, were better than expected GDP and trade figures.

In the 1st quarter, the Australian economy expanded by 1.8%, coming in ahead of a forecasted 1.1%. In the 4th quarter, the economy had expanded by 3.1%. Year-on-year, the economy grew by 1.1%. In the 4th quarter, the economy had contracted by 1.0%.

In April, the trade surplus widened from A$5.574bn to A$8.028bn, also positive for the Aussie Dollar.

Finalized retail sales figures were also out and were in line with prelim figures, affirming a 1.1% rise in April.

While the stats were skewed to the positive, the RBA weighed on the Aussie Dollar on Tuesday.

Standing pat on monetary policy, the RBA stood by its policy outlook, forecasting a hold on policy until 2024 at the earliest.

For the Kiwi Dollar

It was a quiet week.

Business confidence and building consents were in focus.

In May, business confidence improved, with the ANZ Business Confidence Index rising from -2 to 1.8. This was down 5 points from a prelim 7.0, however.

Building consents continued to rise in April, with consents up 4.8% following a 19.2% surge in March.

For the Japanese Yen

It was a busier week.

Industrial production, retail sales, capital spending, and household spending figures were in focus.

Finalized private sector PMIs for May also drew interest.

The stats were skewed to the positive in the week.

Retail sales and household spending delivered some comfort. In April, retail sales rose by 12%, with household spending up 0.1% in the month. Economists had forecast a 2.2% decline in household spending.

Industrial production rose by a further 2.5%, following a 1.7% increase in March, which was also positive.

Capital spending disappointed, however, falling by 7.8% in the 1st quarter. In the 4th quarter, spending had declined by a more modest 4.8%.

Private sector PMIs delivered mixed results in the month, with the services sector struggling.

In May, the services PMI fell from 49.5 to 46.5, which was up from a prelim 45.7. A rise in new COVID-19 cases weighed on service sector activity in May.

The manufacturing sector continued to see growth, however, with the PMI seeing a modest decline from 53.6 to 53.0. This was up from a prelim 52.5.

The Japanese Yen rose by 0.30% to ¥109.52 against the U.S Dollar. In the week prior, the Yen had fallen by 0.82% to ¥109.85.

Out of China

Private sector PMIs for May were out.

It was a mixed set of numbers, however.

The NBS Manufacturing PMI slipped from 51.1 to 51.0, while the non-manufacturing PMI increased from 54.9 to 55.2.

It was a different story for the market’s preferred Caixin numbers, however. The Manufacturing PMI increased from 51.9 to 52.0, while the services PMI fell from 56.3 to 55.1.

In the week ending 4th June, the Chinese Yuan fell by 0.42% to CNY6.3953. In the week prior, the Yuan had risen by 1.02% to CNY6.3685.

The CSI300 and the Hang Seng ended the week down by 0.73% and by 0.71% respectively.

Oil Price Fundamental Daily Forecast – Combination of US, OPEC+ Production Restraints Fueling Rally

U.S. West Texas Intermediate and international-benchmark Brent crude oil prices are positive late Friday after testing a two-year high earlier in the session. The move is being fueled by a number of factors including expectations of increased global demand, OPEC+’s decision to hold production levels steady, the lack of progress in negotiations between the United States and Iran, and government and private industry reports of a greater-than-expected draw in U.S. crude oil stockpiles.

At 17:29 GMT, July WTI crude oil is trading $69.61, up $0.80 or +1.16% and August Brent crude oil is at $71.92, up $0.61 or +0.86%.

Most of the important fundamentals are bullish, however, there are some concerns over the slow pace of global vaccinations, API and EIA gasoline inventory builds and the possibility of a surprise deal between the U.S. and Iran.

Any of these potentially negative events could encourage profit-taking or position-trimming, but I don’t think we’ll see a major change in trend. Some of the weaker bulls will use the news as an excuse to get out of their long positions. Most bullish traders agree that these are short-term factors that should eventually be offset by long-term demand advances.

US Oil & Gas Rig Count Falls for First Time in Six Weeks – Baker Hughes

U.S. energy firms this week cut the number of oil and natural gas rigs operating for the first time in six weeks as growth in drilling slows despite crude prices hitting their highest since 2018.

The U.S. oil and gas rig count, an early indicator of future output, fell by one to 456 in the week to June 4, according to data on Friday from energy services firm Baker Hughes Co.

Despite this week’s decline, the total rig count was up 172 rigs, or 61%, over this time last year. It was also up 87% since falling to a record low of 244 in August 2020, according to Baker Hughes data going back to 1940.

U.S. oil rigs were steady at 359 this week, after rising for four weeks in a row.

US Shale Restraint Pushes Oil Prices to Multi-year High:  John Kemp, Reuters

John Kemp from Reuters wrote on Friday that crude oil prices have climbed to their highest level for more than two years as U.S. shale producers have added only a limited number of extra rigs and production, opting to push for higher prices and profits instead.

In the current phase of the cycle, prices are rising mostly because of the declining responsiveness of the shale sector, rather than official production restraint from OPEC and its allies in the wider OPEC+ exporters group.

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

Crude Oil Weekly Price Forecast – Crude Oil Markets Break Out

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken out to the upside during the course of the week, breaking the top of the ascending triangle that I have marked on the chart. As we close out the week, we are getting relatively close to $70, an area that of course is a major psychological barrier and an area on the longer-term charts that people will stand up and take notice of. It is because of this that if we can break above the $70 level that I believe the market goes much higher, perhaps looking towards the $75 level. In the short term, I look at the end pullbacks as a potential buying opportunity as it offers oil “on the cheap.”

WTI Oil Video 07.06.21

Brent

Brent markets also did the same thing, breaking out of an ascending triangle that a lot of people have been paying close attention to, especially as the $70 level was the top of it. By breaking above there, the market looks as if it is free to trying to fulfill the overall measured move coming out of the triangle, which suggests that Brent could reach as high as $80. $80 of course would be a large, round, psychologically significant figure and an area where we have seen noise previously.

Ultimately, as long as we can stay above the uptrend line from the ascending triangle, I believe that this market has plenty of support underneath. Furthermore, it is also worth noting that the market is getting ready to see a “on the cross” when it comes to the weekly chart as well, although I do not put too much credence into that.

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

Crude Oil Price Forecast – Crude Oil Markets Continue to Advance

WTI Crude Oil

The West Texas Intermediate Crude Oil market has gone back and forth during the course of the trading session on Friday as the jobs number came out with an addition of 559,000 jobs for the month. There were whispered numbers of 1 million, so it does make quite a bit of sense that we have seen this market struggle a bit, but I do think there is plenty of support underneath and the fact that we are peeling back a little bit from the $70 level should not be a huge surprise as it is psychologically significant.

Underneath, the $67.50 level should offer support, as it was the top of the ascending triangle. That being said, I would be a buyer on a dip and believe that we will not only reach towards $70 but also break far above that.

Crude Oil Video 07.06.21

Brent

Brent markets have gone back and forth as well, and as a result I do think that given enough time the market is probably going to go looking towards the $75 level above, as the $70 level should now offer support for the same reasons that the $67.50 level should in the WTI grade. When you look at the chart, you can see that the $70 level was the top of an ascending triangle, and it of course has a significant amount of psychological importance built into it as well. All things been equal, I think that you buy dips in this market as it continues to strengthen and therefore there is almost no way to short this market anytime soon.

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

Crude Oil Price Update – Looking Top-Heavy with $67.33 to $66.84 First Downside Target

U.S. West Texas Intermediate crude oil futures are edging higher on Friday, but inside yesterday’s trading range, suggesting investor indecision and impending volatility. The market is being supported by expectations of higher global demand, especially from the United States and China, but gains may be being capped by concerns over the slow pace of global vaccinations.

At 11:20 GMT, July WTI crude oil futures are trading $69.04, up $0.23 or +0.33%.

In other news, on Tuesday OPEC+ said they would stick to agreed supply restraints. Yesterday, the U.S. Energy Information Administration (EIA) reported a bigger-than-expected drop in crude oil inventories. Both events proved to be supportive along with the delay in the U.S.-Iran nuclear negotiations.

Daily July WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $69.40 will signal a resumption of the uptrend. A trade through $61.56 will change the main trend to down. This is highly unlikely, but with the market up nine sessions from its last main top, today’s session begins with the market inside the window of time for a potentially bearish closing price reversal top.

The minor trend is also up. A trade through $65.25 will change the minor trend to down. This will also shift momentum to the downside.

The minor range is $65.25 to $69.40. Its retracement zone at $67.33 to $66.84 is the first potential downside target area.

The main range is $61.56 to $69.40. Its retracement zone at $65.48 to $54.55 is the best value area at this time.

Daily Swing Chart Technical Forecast

The direction of the July WTI crude oil futures contract on Friday is likely to be determined by trader reaction to $68.80.

Bullish Scenario

A sustained move over $68.80 will indicate the presence of buyers. If this move creates enough upside momentum then look for a move into $69.40. Taking out this level will indicate the buying is getting stronger.

Bearish Scenario

A sustained move under $68.80 will signal the presence of sellers. Taking out $68.19 will indicate the selling is getting stronger. This could trigger a sharp break into the minor retracement zone at $67.33 to $66.84. Since the main trend is up, look for buyers on a test of this area.

Side Notes

Taking out $69.40 then closing lower for the session will form a closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

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

Crude Oil Price Forecast – Crude Oil Gives Up Early Gains

WTI Crude Oil

The West Texas Intermediate Crude Oil market has turn things around after initially rocketing to the upside on Thursday as it looks like we are a little bit overextended. At this point time though, the market is most clearly bullish so you cannot be a seller under any circumstances. Traders out there are looking at the reopening trade and of course OPEC has reiterated its expectation of more demand going into the end of the year. With this being the case, then the market is likely to continue to see buyers on dips. With the jobs number coming out on Friday that also could come into the picture as well.

Crude Oil Video 04.06.21

Brent

Brent markets also gave up the initial gains during the trading session, but quite frankly it does not look like a market that you should be shorting. A little bit of a pullback will probably be thought of as potential value, offering the opportunity to pick up oil “on the cheap”, with the $70 level underneath likely to offer a bit of support, as it is not only a large, round, psychologically significant number, but it is also where the market had recently broken out of.

With that, “market memory” could come into play and based upon the ascending triangle that we just broke out of, it is very likely that we could go looking towards the $80 level over the course of the summer. In the short term, I look at any dip as an opportunity to get long yet again.

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

Oil Price Fundamental Daily Forecast – Technical Factors Capping Gains Ahead of EIA Inventories Report

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading slightly higher early Thursday after giving up most of their earlier gains. The price action is likely being driven by profit-taking with the market up considerably over the last eight sessions.

The fundamentals are bullish with demand expectations seemingly rising everyday as the pace of the global economic recovery picks up steam. Concerns over new oil from Iran have been dampened by the slow pace of negotiations and OPEC+ agreed to stick with the current production rate for June.

At 09:43 GMT, July WTI crude oil is at $68.87, up $0.04 or +0.06% and August Brent crude oil is trading $71.43, up $0.08 or +0.11%.

Late Wednesday, an industry report was mixed with crude oil stocks falling more than expected and gasoline stockpiles posting a surprise build.

Later today, the U.S. government will release its inventory numbers later than usual at 15:00 GMT. Crude inventory is expected to drop by 1 million barrels, but traders will be watching the gasoline numbers very closely since the U.S. summer driving season has begun.

Demand Expected to Surge

Crude oil demand is expected to surge later this year, particularly in the United States and China.

The consensus among market forecasters, including the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is that oil demand will exceed supply in the second half of 2021, which has spurred the recent run in prices.

OPEC+ data shows that by the end of the year oil demand will be 99.8 million barrels per day (bpd) versus supply of 97.5 million bpd.

This rebalancing will be led by resurgent demand in the United States, the world’s biggest oil user, from vehicle consumption this summer, along with rising fuel needs in China, the world’s second biggest oil consumer, and the U.K. as it exits its COVID-19 lockdowns.

American Petroleum Institute Weekly Inventories Report

The American Petroleum Institute (API) on Wednesday reported a draw in crude oil inventories of 5.36-million barrels for the week-ending May 28. Analysts had predicted a draw of 2.114-million barrels for the week.

The API reported a build in gasoline inventories of 2.51-million barrels for the week-ending May 28 – compared to the previous week’s 1.986-million-barrel draw. Analysts had expected a 1.385-million-barrel draw for the week.

Distillate stocks saw an increase in inventories this week of 1.585 million barrels for the week, after last week’s 5.137-million-barrel decrease.

Daily Outlook

The early price action suggests the market could be poised for a short-term setback. We don’t feel it is going to be a trend-changing event, however. Bullish traders may decide to take a little off the top if the EIA reports disappointing crude oil and especially gasoline inventories numbers. However, this is likely to be a short-term event. A near-term pullback would be welcomed by traders who are unwilling to chase prices higher at a one-year high.

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

Crude Oil Price Update – Needs to Hold $68.83 to Sustain Upside Momentum

U.S. West Texas Intermediate crude oil futures are trading higher for a third session on Thursday on expectations for a surge in fuel demand amid a recovery in the global economy. The market is also absorbing OPEC+’s decision to continue with plans to ease supply curbs through July. Additional support is being provided by an industry report that showed a larger-than-expected draw in crude oil. However, gasoline and distillate inventories showed unexpected builds.

At 03:52 GMT, July WTI crude oil is at $69.25, up $0.42 or +0.61%.

Late Wednesday, one day later than usual, the American Petroleum Institute (API) reported a draw in crude oil inventories of 5.36-million barrels for the week-ending May 28. The API also reported that gasoline inventories rose 2.51 million barrels and distillate inventories rose 1.585-million barrels.

Daily July WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at $69.40 will signal a resumption of the uptrend.

The main trend will change to down on a move through $61.56. This is highly unlikely, but since the market is up eight days from the last main bottom, the session begins with crude oil inside the window of time for a closing price reversal top.

The minor range is also up. A trade through $65.25 will change the minor trend to down. This will also shift momentum to the downside.

The new minor range is $65.25 to $69.40. Its retracement zone at $67.33 to $66.84 is the first downside target. Since the main trend is up, buyers could come in on a test of this area.

Daily Swing Chart Technical Forecast

The direction of the July WTI crude oil market on Thursday is likely to be determined by trader reaction to $68.83.

Bullish Scenario

A sustained move over $68.83 will indicate the presence of buyers. Taking out the intraday high at $69.40 will reaffirm the uptrend and could trigger an acceleration to the upside.

Bearish Scenario

A sustained move under $68.83 will signal the presence of sellers. If this move creates enough downside momentum then look for the selling to eventually extend into $67.33 to $66.84.

Side Notes

A close under $68.83 will form a potentially bearish closing price reversal top. If confirmed, this could trigger the start of a 2 to 3 day correction.

Look for volatility on Thursday at 15:00 GMT, following the release of the U.S. Energy Information Administration (EIA) weekly inventories report.

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