Learn to Trade Commodity Overview 8th July
Focus on Oil
WTI Futures staged a substantial decline towards the end of last week, leaving Oil futures on the backfoot fighting for support around $72. Major pressure has come from the equally poor performance of the equity market, dragging the market lower in its wake.
Thoughts from the trading floor
The technical perspective appears to largely favour the bears in the short term with current momentum firmly in their camp. The key break of $74.50 level opened the floodgates to a downward slump to weekly lows of $71.09. The market has had some volatile sessions of late including strong upward retracements just shy of the $74 handle. Bulls will be hoping they can regroup somewhat and push for key levels at $74.52 and $75.21, then there is a large gap to the next hurdle of $78.51 and $79.37. Bears will be eager to halt any signs of recovery and focus on a break of $71.09, however they may have to endure a period of consolidation and range trading to form enough pressure to achieve this goal. Once broken sellers will be eyeballing major support at $69.49 and $67.12 with the ultimate goal of May’s lows at $64.20
Last night the American Petroleum Institute reported that US oil inventories fell -7260K barrels last week. This compares to the analyst estimate for the DOE number of –2125K barrels. The API gasoline also fell -191K as opposed to the estimate for the DOE number of 0K. With such a large difference between the DOE estimates and the API number we expect the DOE release today to show a number outside of its expected range and this could leading to amplified instability in the market.
The Oil markets continued their downward trajectory last week. This has been mainly led by the ongoing weak economic data coming out of the US. A further strengthening dollar has also weighed heavily on Oil prices and demand. There has been somewhat of a rebound over the last several days in both Oil and Equities. The market sentiment remains a very important driver with Oil following equity markets and other risk-on trades. Part of this bounce can also be attributed to supply issues, oil inventories in the United States tumbled by 7.3 million barrels last week more than three times the expected drop.
Bull View
Bulls will be hoping this short-term temporary surge in momentum continue to drive the market back higher above the key pivotal levels of $75.72, then rebuild a base of support and continue the long-term upward trend.
Bear View
Bears will be desperately looking to put a quick end to this upward rebound in the market. Aiming to drag the market lower into the $72 region and further capitalising on last weeks break.
Futex View
We are still bullish the Oil market, it has once again shown its primarily led by market sentiment and still highly correlated to risk-on asset trades. The current market sentiment is positive and we will be looking for a full reversal of last weeks dip.
Tags: Commodity, learn to trade, market profile, technical analysis
