WTI oil outlook: Oil price rises on renewed supply concerns
(Slobodan Drvenica – Windsor Brokers)
WTI oil advanced around $8 in a strong recovery that extends into third straight day, lifted by renewed supply concerns.
Growing worries that OPEC members Saudi Arabia and United Arab Emirates, the only two cartel-member countries with spare capacity available to cover up for lost Russian supply, are unlikely to significantly increase production, while unrest in Libya adds to supply concerns.
Higher oil prices add to already complicated economic situation on supporting high inflation, but fears that strong tightening of the monetary policies by the major central banks would lead to economic slowdown and subsequently towards recession, keeps lid on oil prices.
Fresh extension higher on Tuesday broke above important $110 barrier (psychological/Fibo 38.2% of $123.65/$101.52 fall) with sustained break higher to add to revived near-term bullish bias, but caution is required as rising negative momentum on daily chart and overbought stochastic, warn of recovery stall.
Bulls eye next pivotal barriers at $111.91 (Fibo 61.8%) and $112.59 (daily Kijun-sen), violation of which would improve near-term structure and allow for further recovery, but risk that these levels would cap current recovery, should be also considered.
Res: 111.91; 112.59; 113.46; 114.22.
Sup: 110.00; 109.03; 108.28; 107.06.
EURUSD on hold, waiting Lagarde’s comments and central banking conference
(Vasilis Tsaprounis – TopFX)
Nothing seems to have changed in the pair, trading in a limited range remains. The exchange rate behavior as we mentioned yesterday did not surprised and moved below to 1.06 level.
Although temporarily did some gains, the single European currency exceeded temporarily the 1,06, but failed to maintain these levels and returned to lower prices.
It is clear that the pair is looking for a direction but expects a significant reason which will give the signal.
Maybe this will come from the European Central Bank President statements, Christine Lagarde, who is attending the Central Banking Conference in Portugal from today until tomorrow, may we have important developments in a central banks field.
Although the question remains, what is it that President Lagarde could say and give a significant boost to the euro beyond a temporary.
Euro buyers would be happy if ECB rhetoric becomes more aggressive on future interest rate hikes.
This would reduce the gap created between Fed and ECB, as clearly the Fed rhetoric so far is more aggressive.
In view of the above, we maintain the neutral position of the last days, expecting a limited range trading for the pair in anticipation of Lagarde and Wednesday’s conference.