Learn to Trade – Commodity Overview 8th September
Focus on Oil
The Crude Oil Market has experienced volatile trading over the last week. NYMEX Crude Light futures remain choppy with prices fluctuating between a range of $75.60 and $70.77.
Thoughts from the trading floor
The technical perspective still appears bearish for Crude Light futures. However, after a daily double bottom from the previous strong level of $71.09, appears to have temporarily halted the bear advancement. The bounce from this double bottom rebounded prices briefly back above the $75 mark, but bulls were unable to hold this ground. The market has developed a short term trading range between $75.91 and $70.77.It is highly likely that the market will consolidate over the next several days and with bears and bulls fighting it out for control, there are likely to be yet more volatile sessions. With the momentum still on their side it is likely that the market will retest the lows of $70.77 and if broken bears will be looking to target a deeper probe looking to test support at $69.49, $67.12 and ultimately May’s lows of $64.20. If however bulls regain control the break and the hold of the range at $75.21 will confirm this and open the gates towards higher moves into $78.16 and $79.69.
Due to Labour Day in the US the American Petroleum Institute will report tomorrow, with estimated US oil inventories of 4765K barrels last week. This compares to the analyst estimate for the DOE number on Thursday of 3425K barrels. The API gasoline tomorrow is estimated at -589K as similar to the estimate for the DOE number of -212K. With such a quiet week on the economic calendar and the uncertainty in the Oil market, it will be even more important for traders to watch the weekly oil numbers.
Crude are still being driven on lower on weaker global demand with increasing nervousness on European sovereign debt concerns once again this week. Again Dollar strength is still weighing heavily on oil prices. It is also increasing the Labour Day holiday marked the end of the U.S. summer driving season, the peak gasoline demand period. Refiners often rest processing units for maintenance in September and October as consumption of the fuel drops and before heating-oil use increases. This is an important consideration when trading this month’s Oil numbers.
Bull View
Bulls will be hoping that the crucial $71.09 support holds again and the market can create a bottom upon which buyers can regain some recent losses. Bulls will be looking to break back above $75.60 over the coming week.
Bear View
Bears still hang onto control and will be looking to retest $71.09, to investigate the strength of buying. With momentum firmly on their side, bears will be hoping to sweep aside this level and drive deeper into the $69 region.
Futex View
We are still bearish on the Oil markets. However, with choppy range bound trading expected we will be looking to fade rallies, with a short-term target of the $71.09 being the important support level. We anticipate the market will gravitate back to this level.
Tags: API, Bearish, Bears, bull, Bullish, Crude Oil, european, futex, futures, Nymex, Oil, Oil Market, US
