Top Story

Crude oil rebounds from critical price level

Since Friday, the West Texas Intermediate (WTI) US benchmark for crude oil has been rebounding from a critical price juncture around the $43 level. This rise has been driven primarily by tentative hopes for an agreement among Russia, Saudi Arabia, and potentially other OPEC members to limit oil production in the interest of steadying crude prices. Also helping to boost crude oil in the past few days has been a weaker US dollar, which has been pressured by diminished expectations of a September Fed rate hike due to a string of relatively weak US economic data since late last week.

Major oil producers are scheduled to confer on a potential output freeze in late September, and the possibility of an agreement being reached then has been helping to support crude prices. Given April’s disappointing meeting in Qatar that failed to produce any agreement, however, this upcoming meeting is on shaky ground, at best. With that said, any semblance of cooperation among major producers like Saudi Arabia and Russia has the potential to further extend the rebound for crude oil, at least for the time being, and especially if coupled with continued dollar weakness.

Thursday brings the weekly report from the US Energy Information Administration concerning US crude oil inventories. For the most part, the past several weeks since late July have overwhelmingly shown significantly larger inventory builds than previously anticipated. Whether or not this trend continues on Thursday will have a marked impact on the current crude oil rebound.

From a technical perspective, the price of US crude oil represented by WTI has rebounded, as noted, off the key $43 support level as of late last week. That price level was also concurrently at a descending trend line extending back to the June price highs, as well as at the 61.8% Fibonacci retracement of the last major rally in August. Therefore, the pullback and rebound were highly technical in nature and could presage an impending extension of August’s rally, as long as price remains above $43 support. In this event, a sustained move above $45 could prompt WTI to begin targeting the $50 psychological resistance level once again.

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

The markets are moving. Stop missing out.

Open an Account