The IEA has cut its 2019 estimate for oil demand in its latest monthly report, blaming trade tensions and the associated consequences on the outlook for global growth. The agency stated that the worsening trade outlook is “a common theme across all regions,” and that “the consequences for oil demand are becoming apparent.”
The USOIL prices are presently down 0.3% on the day, at $52.12. Crude prices rallied yesterday following news that two oil tankers had been attacked in the Gulf of Oman, which the US has blamed on Iran. Developments on this front warrant close scrutiny, though for now crude looks to be remaining in the grip of an overall bear trend.
The WTI benchmark (USOIL) prices are down 3.6% w/w and by over 16% from month-ago levels. The IEA stated that US sanctions on Iranian and Venezuelan supply, and OPEC-led output quotas, along with disrupted Libyan supply, are only having a limited impact on supply, while surging US supply and increased production from Brazil, Canada and Norway would add to an increase in non-OPEC supply, estimated to be 1.9 mln bpd this year and 2.3 mln bpd in 2020.
Currently in the commodity markets, the USOIL is traded at low $52 area, with lack of direction so far today, but in general in June, as it bounces between $50.50-$54 range. Despite the 2-week consolidation within the range, the asset is forming lower highs this week, supporting USOIL weakness. Hence the medium term outlook remains bearish since mid April, while the upcoming week could be key for the future performance of oil, even-though fundamentals are bearish as well.
From the technical perspective, MACD is negatively configured well below neutral zone, while RSI has improved slightly but remains trapped oversold zone. Therefore USOIL needs to present a sufficient rally (more than $57) for the negative outlook to change.
Yesterday’s high at $54.43 is the immediate Resistance for the asset. However the Key Resistance and Support levels for the USOIL are $54.80 and 2-week low at $50.15respectively. A break below the latter could open the doors towards 2018 lows, while a break above Resistance could retest the 38.2% Fibonacci retracement at $56.60 and the round $57.00 level.
Disclaimer: Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of purchase or sale of any financial instrument.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.