Crude Under Pressure
Oil prices are seeing continued selling as we move through the European morning on Tuesday. Crude futures are now down around 3% from last week’s highs on the back of weaker data out of China at the start of the week. Chinese GDP was seen falling back to 4.7% last quarter, down from 5.3% prior and below the 5.1% the market was looking for. Alongside that. Industrial production was seen cooling to 5.3% from 5.6% prior. These readings mark the latest in a series of weaker Chinese data, stoking fears of a growing slow down there which is having heavy negative implications on the demand outlook for oil.
US Rate-Cut Expectations
Indeed, the fall in oil prices comes despite growing optimism over expected US rate-cuts which is weighing on USD. With US inflation having fallen for three consecutive months traders are now pricing in at least one rate cut this year, in September, with growing expectations that a further cut will be seen in Q4. This narrative, and a weaker USD should help boost oil prices though for now China fears seem to be taking precedent.
This Week
Looking ahead this week, focus will be on the latest EIA inventories data due tomorrow along with further US data and Fed speakers across the week. If USD finds fresh downward momentum this should help underpin crude to some extent. If we see bullish EIA data tomorrow that should help bolster sentiment too, putting the focus back on summer demand expectations in the US.
Technical Views
Crude
The rally in crude has stalled for now into the 82.59 level, with the retest of the broken bull channel and the bear trend line holding firm as resistance for now. With momentum studies weakening, the focus is on a continuation lower while below 82.59 with 77.64 the next support to note. In the Signal Centre today we have a sell limit at 82.24 suggesting a preference to stay short into any recovery from current levels.
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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.