Fundamental Overview
Crude oil was one of the biggest movers today as the price gapped sharply lower following the Israel’s retaliation over the weekend. The reason for the drop is of course the lack of attacks against energy facilities. That’s something that’s been already known, so we might see a pullack now that this story is in the rear view mirror.
In the big picture, central bank easing generally leads the manufacturing cycle, so we can expect global growth to pick up and support the crude oil market. One risk that might be weighing on the market is the US election as a Trump victory might be bearish due to increased supply expectations.
It’s worth remembering that in 2016, crude oil did fall initially on Trump’s victory but eventually rallied for more than 20% in the following three months on higher global growth expectations. So, it’s going to be a tricky one, but global growth should eventually prevail.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil couldn’t break above the key 71.67 level and eventually sold off hard. The natural target for the sellers should be the support zone around the 65 handle where we can expect the buyers to step in to position for a rally back into the top of the yearly range.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a minor support level defined by the October swing low when the Israel-Iran tensions began. This is where we can expect the buyers to step in with a defined risk below the level to position for a pullback into the downward trendline. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 65 handle.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the big gap lower today following the weekend news of Israel’s retaliation and lack of energy infrastructure targets. There’s not much to add here as the buyers will look for a bounce on the 66.50 swing level, while the sellers will want to see the price breaking lower to increase the bearish bets into the 65 handle. The red lines define the average daily range for today.
Upcoming Catalysts
Tomorrow we have the US Job Openings and the US Consumer Confidence report. On Wednesday, we get the US ADP and the US GDP. On Thursday, we have the US PCE, the US Jobless Claims and the US Employment Cost Index data. Finally, on Friday, we conclude the week with the US NFP and the US ISM Manufacturing PMI.
