Crude Weighed Down on Monday
Oil prices are starting the week on a softer footing following heavy selling at the end of last week. Crude futures have reversed sharply from the October highs with prices dragged down amidst the general turn lower in commodities prices seen alongside Trump’s re-election. A fresh move higher in USD over the last month has weighed heavily on commodities prices, with oil no exception. With many forecasting higher inflation under Trump, the market has scaled back its Fed easing expectations in coming months, helping keep USD supported.
Geopolitical Uncertainty
While a stronger USD is having a firm downward impact on crude prices for now, there are still key upside risks to monitor, specifically the Russia-Ukraine War and the conflict in the Middle East. Over the weekend, Russia intensified its attacks on Ukraine, launching its largest airstrike in months. Meanwhile, reports that president Biden has approved Ukraine to use US-supplied long-range missiles against Russia have further increased uncertainty. For now, oil prices have been unaffected, but this could change on any incoming headline.
This Week
Looking ahead this week, crude traders will be watching movements in USD as well as tracking news flow linked to Russia/Ukraine and the Middle East. US, UK and EZ PMIs later in the week will also be closely watched with any fresh weakness in industrial readings likely to feed into negative sentiment. While USD remains so strong, prices look vulnerable to further downside near-term.
Technical Views
Crude
Crude prices continue to hold at the 67.45 level support and the bear channel lows for now. While this area remains as support, a recovery towards 72.61 is still viable. Below here, however, focus turn to 63.83 as deeper support, in line with bearish momentum studies readings.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.