Fundamental Overview
Crude oil has been under sustained pressure since the beginning of July. Analysts have been pointing to potential demand weakness under the surface and economic slack in China. The increase in Trump’s winning odds after the failed assassination attempt might have also contributed to some weakness as he’s a great supporter of the “drill, baby, drill” slogan and he will likely put an end to the war in Ukraine if he gets elected.
Yesterday, prices bounced on renewed tensions in the Middle East. In fact, Israel struck Beirut (Lebanon) targeting the Hezbollah commander that launched a recent missile attack against Israel killing 12 children. Just some hours later, Israel managed to kill the top Hamas leader Ismail Haniyeh in Teheran (Iran).
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil broke through the key 77.00 support and extended the drop into the 75.00 level. The sellers remain in control and the natural target should be the 72.50 level. The buyers will want to see the price rising back above the 77.00 level to regain some control and start targeting a rally into the 80.00 resistance.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that a minor downward trendline defining the current bearish momentum. This is where the sellers will likely step back in with a defined risk above the 77.00 resistance to position for a drop into the 72.50 level. The buyers, on the other hand, will want to see the price breaking above the trendline and the resistance to pile in and position for a rally into the 80.00 resistance next.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have the upper bound of the average daily range for today right around the resistance, so we might not see a breakout already today and the sellers will have a defined level to protect their stops.
Upcoming Catalysts
Today we have the US ADP, the US Employment Cost Index and the FOMC Policy Decision. Tomorrow, we get the latest US Jobless Claims figures and the US ISM Manufacturing PMI. Finally, on Friday, we conclude the week with the US NFP report.
