(Ian Coleman M.S.T.A. – Educate2accumulate)
Higher prices and a deteriorating economic environment have started to take their toll on oil demand, but strong power generation use and a recovery in China are providing a partial offset.
World oil supply jumped by 690 kb/d to 99.5 mb/d in June as resilient Russian production and higher output from the US and Canada more than offset steep maintenance-related losses from Kazakhstan.
Rarely has the outlook for oil markets been more uncertain. A worsening macroeconomic outlook and fears of recession are weighing on market sentiment, while there are ongoing risks on the supply side. For now, weaker-than-expected oil demand growth in advanced economies and resilient Russian supply has loosened headline balances.
US oil weekly chart
US Oil traded to the highest level in 163 months in March 2022 (high print of 129.42). Elliott Wave enthusiasts might consider this to be the completion of a bullish 5-wave count. This would suggest that we are now in the corrective pattern to the downside, a notoriously difficult phase to analyse and trade.
A Bearish Outside Week was posted on 13th June. This candle often indicates the start of a new downside bias.
We have TL system support located at 89.17 and 88.00.
US oil daily chart
An exact AB=CD corrective formation would take the commodity to 87.10. We posted an 87.03 on Friday. The last day of the week posted an indecisive Doji style candle. A high close today, above Thursdays swing high (91.88), would result in a Morning Doji Star formation being posted. This three-candle pattern is often seen at the base of a trend and the start of a new upside bias.
US oil daily chart (2)
A Bullish Cypher pattern known as a BUTTERFLY has been completed. The Fibonacci confluence area is between 87.90 – 87.64. This pattern is often seen at the end of a trend and the start of a new upside bias.
Recession fears in UK, Gold (XAU/USD) falls on great NFP report, NatGas opens with a gap, again [Video]
(Brad Alexander – FX Large Limited)
Last week’s US Non-Farm Payrolls report was much higher than expected sending the USD higher and alleviating fears of a recession in the world’s largest economy.
However, the US Federal Reserve, analysts and investors will be watching this Wednesday’s US CPI monthly figures which will tell us about current levels of inflation.
Also on the calendar are some important Manufacturing and GDP figures from the UK.
Last week’s speech by Andrew Bailey painted a very unpleasant picture of the UK economy for the next couple of years so these GDP figures could help or make matters a lot worse.
GBP fell last week based on the speech even though the Bank of England raised Interest Rates.
We may not know the future of GBP until a new Prime Minister is chosen which is less than one month away.
The great NFP report saw Gold falling and this may be giving us a great opportunity to buy but we will look at this from a technical perspective tomorrow.
Our wait for the big JPY reversal continues as the Japanese Yen fell again based on the US vs Japanese Interest Rate differential and Friday’s good NFP report made this worse.
However, we still see technical opportunities and we will look again tomorrow.
Just like last week, Natural Gas has opened with a gap to the downside and the bias is on the Sell side but the unpredictable situation in Russia makes this commodity quite volatile.