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Weak US Helps Oil
Crude futures are currently undergoing a shallow recovery rally helped by a mid-week pull back in the US Dollar. Softening US yields have seen USD trading lower on Wednesday, allowing commodities and other risk assets some room to climb. Oil prices suffered a heavy 9% loss last week as fresh strength in the US Dollar combined with other factors to weigh on sentiment. OPEC+ was seen holding its oil production quota unchanged which disappointed bulls who were hoping that cuts would be deepened.
US Production in Focus
In the US, record crude production has been a major focus point. With ample US supply seen undermining the impact of OPEC+ production cuts, oil prices have been struggling to maintain the initial upside push seen this year. Indeed, despite ongoing conflict in the Middle East and the growing risk of a broader escalation, oil prices appear to be linked more to USD flows and supply/demand expectations currently.
Fed Outlook & Oil
The shift in view from the Fed has been a major headwind for oil prices recently. With the Fed pushing back against near-term rate cut calls, and with US data holding up surprisingly well, USD has maintained strength so far this year, keeping oil prices pressured. Looking ahead, oil prices look likely to struggle to make meaningful headway higher unless we see a deeper move lower in USD or a severe escalation of violence in the Middle East which raises risks of heavy supply disruption.
Technical Views
Crude
The sell off in crude has paused for now into a test of the bull channel lows and the 72.61 level. While this area holds, the focus is on a fresh rotation higher and further test of the 77.64 level and channel highs, with 82.59 sitting above as the higher target.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.