Oil picks up from 7 month low
Fiona Cincotta August 8, 2019 11:29 AM
Today, the price of oil took a U – turn, recovering on a combination of:
1. Better than forecast Chinese trade balance data
2. Improved risk sentiment amid easing US – Sino trade tensions. This comes following a stronger than expected official fix for the yuan, reducing fears of a currency war.
3. A weaker dollar
4. News flow that Saudi Arabia, with other OPEC countries could take further action to support the price of oil.
Trade war rhetoric will continue to guide the oil market. However any sign of deeper production cuts from Saudi Arabia, the largest oil exporter will undoubtedly help stabilise the price of oil. Saudi Arabia won’t have an easy task convincing the other OPEC members, we only have to look back a month to see the difficulties there were to get the OPEC + group to agree to continue supply cuts. With this in mind the upside to this news flow could be limited.
Concerns over the impact of the ongoing US – Sino trade dispute are growing. The fact that Saudi Arabia is considering action to limit supply is sufficient to pause the current sell off for now. We suspect that the market will need further convincing to push today’s rally higher.
WTI levels to watch:
WTI is currently up 2.2% after dropping to a 7-month low in the previous session. The uptrend could continue whilst support holds at $52.25. A breakthrough this level could open the door to support at $51.18 prior to $50.50.
Conversely, should $52.25 hold, resistance can then be seen in the region of $53.50/60.
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.