Jump to content

WTI price weakness likely to continue as tensions rise


Recommended Posts

Markets remain increasingly volatile and oil is quick to react to news headlines and sentiment changes.

 

 

Daniela Sabin Hathorn | Presenter and Analyst, London | Publication date: Wednesday 03 August 2022 

Market volatility continues

Markets remain increasingly volatile. This is likely to do with the fact that they are trying to price in a recession, all whilst being convinced that central banks will act accordingly to ease the blow.

This means trading should be focused on tighter time frames as moves are likely to be exasperated.

One asset that is known for being very volatile is oil. The commodity is quick to react to news headlines and sentiment changes, meaning double digit percentage moves are not uncommon.

For the last seven weeks, West Texas Intermediate (WTI) has been stuck in a bear market, taking the price of a barrel from $120 in mid-June to $93 at present. The move downwards hasn’t been perfect, with some attempted bull rallies along the way, but one thing that has been consistent is the fact that price has been stuck below the descending trendline resistance since the highs in June.

Only one, out of the 36 daily candlesticks since the 16th of June, has managed to see a close above that line. That was last Friday, when we saw global equities rallying higher to end the month of July, leading to sentiment in oil also improving.

But Monday brought a reality check and WTI fell sharply back below the trendline, leading to further weakness up ahead. This descending trendline is the first clear sign of resistance up ahead, and it cannot be ruled out until WTI manages to get a few consecutive daily closes above that line. The nearest area to be aware of is the $100 per barrel level, which is both psychologically and technically important.

Fundamentals

Fundamentally, there are many open wounds for oil prices.

On the one hand, the fear of recession is still present, which has been escalated by the mounting tensions between China and the US. There is also the OPEC meeting scheduled for this Wednesday, which is expected to see production increases agreed, softening the price even further.

Inventories have also been rising over the last few weeks, as confirmed by both the EIA and the API data. All of this is likely going to bring further weakness up ahead.

The current price is already sitting around 5-month lows, and there is little support up ahead until it reaches the $85 per barrel area. This means that if the pullback intensifies, we are likely to see any sharp moves washed out by a bearish pattern of lower highs and lower lows.

 

IG Group.PNG

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      20,032
    • Total Posts
      88,043
    • Total Members
      69,027
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    daisycarro3
    Joined 29/09/22 05:18
  • Posts

    • PayPal Holdings Inc.,Elliott Wave Technical Analysis PayPal Holdings Inc.,(PYPL:NASDAQ): Daily Chart,September 29 2022 PYPLStock Market Analysis:It looks like we have a three wave structure to the downside which makes us believe the count is moving as expected. Waiting for confirmation level to be broken. PYPLElliott Wave count:{c} of 2. PYPLTrading Strategy:Lookinga break of the green line and then a three wave pullback. PYPLTechnical Indicators:We are trying to go back above the 20 EMA. TradingLounge Analyst: Alessio Barretta       PayPal Holdings Inc.,PYPL: 4-hour Chart,September 29 2022 PayPal Holdings Inc.,ElliottWave Technical Analysis PYPLStock Market Analysis:The most important thing was to count 5 waves into wave {c} and we can identify them. PYPLElliott Wave count:{c} of 2. PYPL Technical Indicators:Above the 20EMa and RSI made a bounce into neutral territory. PYPLTrading Strategy:Looking a break of the green line and then a three wave pullback.
    • The rally on Wall Street yesterday provided Asian markets with a reason to bounce, as oversold stocks and excessively bearish sentiment finally gave way to some bargain hunting among investors. The Bank of England's decision to intervene in bond markets yesterday provided the foundation for at least a short-term bounce, but whether it turns into anything more sustained remains to be seen. Longer-term of course, rates continue to rise, and the economic outlook remains grim, suggesting that earnings will keep coming under pressure. Thus while another 'bear market bounce' may be in the offing, the overall outlook still suggests that risk assets will struggle. Today sees German CPI and weekly US jobless figures, along with speeches from Fed members Bullard and Mester.   
    • For more up to date news on how markets will open, the latest earnings and economic news, watch IGTV live in the platform at 07:30am UK. Today’s coverage:   Relief for the markets as the mighty USD saw one of its biggest single day declines since the early days of Covid Indices: New lower lows and a mini capitulation for most markets before a rebound. Europe expected to open up. APAC all higher FX: USD weakness unwinding a small degree. EURUSD awaiting German inflation expected to tick up by a margin of more than 150bps to 9.4%’ GBP weaker again  Equities: Toyota global vehicle sales up 44.3% in Aug, a record for the month Commods: Pretty much all of the commodity complex showing an upward retracement in the wake of that weaker USD. Today a small drop apart from oil which is holding Wednesday’s gains      
×
×
  • Create New...