We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
USD/JPY
Bullish
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Gold: 0.05% Oil - US Crude: -0.38% Silver: -0.41% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/9AiehtJMsK
  • The Norwegian Krone and crude #oil prices will be in for turbulent week ahead of an avalanche of central bank rate decisions against the backdrop of political volatility in the middle east. Get your market update from @ZabelinDimitri here: https://t.co/1PKtivOiFv #OOTT https://t.co/IdHpQbAgNe
  • Fantastic thread on the #Fed including explainer on recent repo market cash crunch PS - I highly encourage giving @Trinhnomics a follow https://t.co/GYwqXuTfjY
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇨🇭CHF: -0.04% 🇪🇺EUR: -0.04% 🇬🇧GBP: -0.06% 🇯🇵JPY: -0.09% 🇦🇺AUD: -0.20% 🇳🇿NZD: -0.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/x5I15C64eW
  • #USDJPY's uptrend has stalled, probably while the market awaits the #Fed. It's looking a little stretched but not seriously threatened. https://www.dailyfx.com/forex/technical/home/analysis/usd-jpy/2019/09/18/Japanese-Yen-Remains-Defensive-As-Dollar-Bulls-Eye-Key-Resistance-.html?utm_source=Twitter&utm_medium=Cottle&utm_campaign=twr
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.68%, while traders in France 40 are at opposite extremes with 81.16%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/k2BRFZYdBl
  • 🇦🇺 AUD Unemployment Rate (AUG), Actual: N/A Expected: 5.2% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2019-09-19
  • Cautious "risk-off" tilt at early phase of Wednesday's session. Pro-risk #AUD and #NZD falling alongside #Nikkei225 futures as haven-linked #USD rises. Follow-through may be lacking until the #Fed passes later today https://t.co/0TLRTELdWv
  • How can traders avoid #FOMOintrading? Start by implementing a well-heeled plan taking only four hours per week. Get your insight from @JStanleyFX here: https://t.co/vwUShQPc27 https://t.co/DRa1lwjBWp
  • RT @NickTimiraos: There will be a temptation to call any resumption of balance sheet expansion by the Fed quantitative easing, which isn't…
Crude Oil Prices May Fall Further on Trade Wars, Oversupply Fears

Crude Oil Prices May Fall Further on Trade Wars, Oversupply Fears

2019-05-31 06:30:00
Ilya Spivak, Sr. Currency Strategist
Share:

CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices plunge on trade war worries, EIA inventories data
  • Gold prices edge higher but key chart resistance continues to hold
  • Soft US PCE data may slow liquidation, but is unlikely to offset it

Crude oil prices put in the second-largest daily drop this year yesterday. The biggest drawdown came a mere four days earlier, hinting at acceleration lower. Worries about the negative impact of trade war escalation on global growth, and thereby demand, coupled with disappointing inventory flow data appeared to be the latest catalysts. The selloff continues in APAC trade after the US threatened new tariffs targeting Mexico.

SOFT US INFLATION DATA UNLIKELY TO RESCUE BATTERED CRUDE OIL PRICES

Bellwether S&P 500 futures are pointing sharply lower, hinting at a risk-off tilt through the rest of the trading week. Soft US PCE inflation data may be something a salve for shell-shocked investors. The core rate is expected at 1.6 percent on-year in April, matching the two-year low set in the prior month. Leading survey data hints it may print lower still, boosting hopes that the Fed will dial up stimulus in the near term.

The priced-in outlook reveals that traders put the probability of a rate cut before year-end at a near-certain 90.7 percent, with the adjustment expected some time in the fourth quarter. A dovish adjustment in this view might see an upshift in this timeline. While this might leave a bit more space for a second cut before 2019 runs its course, the possibility that it materializes seems slim at best.

With that in mind, the US Dollar may hold up relatively well on a disappointing outcome, offsetting tepid selling pressure with robust haven demand as the broadly downbeat mood boosts the premium on its unrivaled liquidity. That might limit the data’s ability to offset sentiment-driven crude oil weakness. It may also make for a staid reaction from gold prices, which might have otherwise soared thanks to lower bond yields.

Did we get it right with our crude oil and gold forecasts? Get them here to find out!

GOLD TECHNICAL ANALYSIS

Gold prices are testing resistance capping gains since late February once again. A daily close above this barrier – now at 1293.92 – exposes the 1303.70-09.12 area next. Alternatively, a reversal through rising trend line support dating back to mid-August 2018 (1274.15) targets the 1260.80-63.76 zone.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices dropped to a three-month low, testing support in the 55.37-75 area. Breaking below that on a daily closing basis sets the stage for a test of the 50.31-51.33 zone. Alternatively, a move back above support-turned-resistance at 57.88 opens the door for another challenge of the 60.39-95 region.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

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

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

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

DISCLOSURES

News & Analysis at your fingertips.