Fundamental Overview
It’s been a brutal month for crude oil as renewed growth fears pushed the market into new lows. The negative supply news from Libya and Iraq, and the delay by OPEC+ to increase production from October didn’t help much to slow down the bearish momentum.
The markets have been waiting for the US NFP to get some more clarity on the labour market but instead we got a mixed report with some better details under the hood. That should be good news at the margin as the Fed is still going to ease policy into a resilient economy.
The positioning in crude oil is at a record 13 years low and a contrarian would see this as an opportunity to go against the consensus with the Fed’s easing likely spurring activity in the manufacturing sector and increasing demand.
Crude Oil Technical Analysis – Daily Timeframe
On the daily chart, we can see that crude oil sold off all the way down to the 67.68 low where it consolidated since last Friday. 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 71.67 level. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 64 support zone.
Crude Oil Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a downward trendline defining the bearish momentum. We can expect the sellers to keep leaning on the trendline to position for further downside, while the buyers will want to see the price breaking higher to increase the bullish bets into the 71.67 resistance.
Crude Oil Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we now have a tight range between the 67.60 support and the 69.00 resistance. The buyers will want to see the price breaking higher to position for a rally into the 71.67 resistance, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Small Business Optimism Index. Tomorrow, we get the US CPI report. On Thursday, we have the latest US Jobless Claims figures and the US PPI data. On Friday, we conclude the week with the University of Michigan Consumer Sentiment report.
