Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

A Sharp Bounce In Oil After An Overnight Fall

Published 14/08/2018, 12:09 pm
Updated 06/07/2021, 05:05 pm

Originally published by AxiTrader

QUICK SUMMARY

Amid the turmoil and concern about emerging markets and the global economic backdrop that flowed from the funk yesterday oil came under a little pressure. But it was the idiosyncratic news of a Cushing build and and OPEC downgrade to demand which saw prices drop quickly for WTI and Brent.

And then they bounced very sharply - from very important support for both these benchmarks such that 2% losses are now just 0.35% for WTI at $67.40 and around 0.1% for Brent which is trading at $72.80.

BIGGER PICTURE

As noted above, oil was down early on a combination of a number of factors, but I haven’t yet found a satisfying reason for the very substantial bounce other than the technical support levels last nights lows touched. I’ll get to the chart below, but in the meantime the reasons for the falls seem to have been sourced in growing concern about the impact of the Turkey and rolling EM troubles on growth.

Specifically also last night, there seems to have been data from private firm Genscape suggested there had been a build in Cushing – WTI delivery hub – of 1.7 million barrels over the past week to August 10. That sent prices down around $1 a barrel.

Elsewhere we heard also that the Saudis have cut production but that also OPEC has dropped its demand prediction a little for 2019 to 32.05 million barrels per day – a fall of 130,000 bpd from the last update. OPEC cited global economic concerns flowing from trade tensions but still believe “healthy global economic developments and increased industrial activity should support the demand for distillate fuels in the coming months, leading to a further drawdown in diesel inventories”.

Hope or reality? The CRB, copper, and Aussie dollar moves might suggest there are more concerns than OPEC would like to entertain. We’ll see in time. For the moment though the price action is key.

So check out the chart below of the bounce of Brent from that critical support zone I’ve been talking about for a while now. It reinforces to me that this $70.50/71 in Brent terms and $65.60/66.30 region in WTI are the levels that need to break to turn the consolidation into a deeper retracement.

Chart

DATA:

Yesterday’s Chinese loans and money supply data suggested the re-liquification efforts of the PBOC might be gaining some traction. But we’ll get proof or otherwise today with the release of the monthly triple-treat of retail sales, industrial production, and fixed asset investment for July. We’ll also get the NAB business survey out here in Australia and Japanese industrial production in our time zone.

Tonight, it’s German Q2 GDP and July inflation data as well as UK employment and the second read on EU Q2 GDP. The ZEW economic conditions and sentiment is also out for Germany while export and import prices are out in the US before the API crude data tomorrow morning.

Have a great day's trading.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.