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Crude Oil Prices Eye API and ISM Data, State of the Union Speech

Crude Oil Prices Eye API and ISM Data, State of the Union Speech

2019-02-05 05:30:00
Ilya Spivak, Sr. Currency Strategist
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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices probe lower as Iran exports jump in January
  • Gold prices fall as Fed outlook shift boosts yields, US Dollar
  • API and ISM data, Trump’s State of the Union speech on tap

Crude oil prices turned lower amid reports that exports from Iran rebounded in January despite US sanctions as countries granted exceptions – such as South Korea and Japan – rebuilt uptake. Tanker-tracking data from Bloomberg pointed to a heady rise of over 78 percent from 718k to 1.28 million barrels per day.

Oil rebounded from intraday lows as risk appetite firmed on Wall Street, with the WTI benchmark telling tracking upward alongside the bellwether S&P 500 index. Somewhat counterintuitively, soft durable goodsand factory orders data appears to have been catalyst at work.

Gold prices fell as the priced-in Fed rate hike outlook continued to shift toward a less-dovish setting in the wake of Friday’s upbeat jobs data. That drove bond yields and the US Dollar higher, undermining the appeal of anti-fiat and non-interest-bearing assets.

API AND ISM DATA, TRUMP STATE OF THE UNION SPEECH IN FOCUS

Looking ahead, API inventory flow data is on tap. The outcome will be evaluated relative to forecasts calling for a modest 878.6k barrel build to be reported in official EIA statistics Wednesday. API deviations to the up- or downside may hurt or help prices, respectively.

The non-manufacturing ISM survey is also due. The pace of service-sector growth is expected to have slowed in January. Broadly speaking, timely US news-flow has tended to outperform relative to forecasts since the beginning of the year. A similar result here may buoy yields and USD, hurting gold.

If Friday’s response to US payrolls and manufacturing ISM figures proves to be telling, markets might interpret evidence of economic resilience negatively. Somewhat perversely, that seems to reflect worries about a more assertive Fed. Oil may be hurt if risk appetite falters against this backdrop.

President Donald Trump’s State of the Union address is a wild card. If he uses the occasion to tease the likelihood of a trade deal with China and downplays the probability of another government shutdown over immigration policy, the markets' mood may brighten. The reverse is likely if he steers the other way.

See our guide to learn about the long-term forces driving crude oil prices!

GOLD TECHNICAL ANALYSIS

Gold prices are pulling back from chart inflection point resistance at 1323.60, as expected. From here, a push through a dense support region underpinned by a rising trend line now at 1289.50 initially opens the door for a test of the range bottom at 1276.50. Alternatively, a reversal higher that takes prices above 1323.60 sees the next upside hurdle in the trend-defining 1357.50-66.06 region.

Chart of Gold/USD (Daily)

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices paused to digest gains after breaching resistance in the 54.51-81 area. Buyers see the next noteworthy barrier in the 57.96-59.05 zone, with a close above that eyeing the underside of former trend support line at 61.21. Alternatively, a reversal back below 54.51 sets the stage for another challenge of the 49.41-50.15 region.

Chart of Light Crude Oil Futures, NYMEX (Daily)

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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