News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • How does stock market liquidity benefit its traders? Learn more here: https://t.co/FWKyIDUwAw https://t.co/tyoYrsh8mQ
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/4078fnQJON
  • Looking for a new way to trade reversals? One of the most used reversal candle patterns is known as the Harami. Like most candlestick formation patterns, the Harami tells a story about sentiment in the market. Get better with trading reversals here: https://t.co/kIIBffEMi7 https://t.co/tt59BU8lnS
  • Quarterly earnings from Netflix and Tesla, two big tech companies, will take center stage next week and could set the trading tone for the S&P 500 and the Nasdaq 100. Get your weekly equities forecast from @DColmanFX here: https://t.co/NOCqjJ3TLd https://t.co/HR5xUZeJXp
  • Do you know the difference between investing and trading? Because while the goal might seem the same, they're very different things . Learn more here.https://t.co/fG6fNEPj9q https://t.co/ymGaYjrl1g
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/FOMcsxci50
  • Further your trading knowledge and gain informed market analyses from our expert analyst @DavidJSong on Oil with our free Q4 guide, available for free today.https://t.co/Y6XECmr5fQ https://t.co/XQI3PN4bkQ
  • Nasdaq 100 may hit new high soon. https://t.co/ACtVqiOBl0
  • HSTECH index has likely formed an "Inverse Head & Shoulders" pattern. https://t.co/YFIQEYmuyq
  • The HSI has likely formed a “Double Bottom” chart pattern, which is usually viewed as bullish-biased. https://t.co/wMQ14A867Q
Crude Oil May Rise as Covid Case Growth Slows. WTI Eyes OPEC Outlook, Evergrande

Crude Oil May Rise as Covid Case Growth Slows. WTI Eyes OPEC Outlook, Evergrande

Daniel Dubrovsky, Strategist

Crude Oil Fundamental Forecast: Bullish

  • WTI crude prices build on rally as global Covid case growth rate keeps slowing
  • Traders brushed aside Evergrande risks, but the situation still remains fluid
  • Oil outlook remains bullish ahead of OPEC annual report and coalition meeting

WTI crude oil prices rallied handsomely this past week, brushing aside initial jitters towards the beginning of the week. That is when Evergrande contagion woes likely spooked markets ahead of the Federal Reserve monetary policy announcement. But, those fears subsequently subsided as the company made an onshore coupon payment and the People’s Bank of China injected liquidity into the financial system.

Oil traders ought to keep an eye on ongoing developments out of China, which remain fluid. It was reported that offshore bondholders had yet to receive interest payments by the end of the trading week. The main risk here is that an Evergrande default could weaken Chinese economic growth, and thus global output. China is after all the world’s second-largest economy, and a major consumer of oil.

What likely kept the growth-linked commodity afloat was the aftermath of the FOMC rate decision. There, Chair Jerome Powell hinted at completing policy tapering by the middle of next year. The central bank is also fairly optimistic about the economic outlook, brushing aside near-term risks around the Delta Covid-19 variant. In fact, the price of oil has been tending to inversely track global case growth – see chart below.

With that in mind, as the world continues to move past the current outbreak, and vaccination rates creep higher, WTI could remain on the offensive. On Tuesday, OPEC is salted to release its annual world oil outlook. Members from the cartel recently noted that shortfalls in natural gas are forcing energy consumers to look for substitutes, such as oil. As such, OPEC could boost demand expectations.

That may also come with further output hikes as OPEC works to gradually reintroduce supply into the market. But, the next meeting of the coalition is scheduled for October 4th. Until then, this may leave prices bolstered. Keep a close eye on Fed commentary this week. Chair Jerome Powell is scheduled to testify before Congress. Later in the week, the central bank’s preferred gauge of inflation will cross the wires, likely to impact policy bets.

Crude Oil Bounces as Global Covid Case Growth Peaks

Crude Oil May Rise as Covid Case Growth Slows. WTI Eyes OPEC Outlook, Evergrande

Crude Oil Sentiment Analysis

According to IG Client Sentiment (IGCS), about 38% of retail traders are net-long crude oil. Downside exposure has climbed by 8.40% and 11.77% respectively. We typically take a contrarian view to crowd sentiment. Since most traders are net-short, it suggests prices may keep rising. Recent shifts in positioning are further underscoring the bullish contrarian trading bias.

Crude Oil May Rise as Covid Case Growth Slows. WTI Eyes OPEC Outlook, Evergrande

*IGCS chart used from August 24th report

--- Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

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

DISCLOSURES