Crude Oil Prices Pause Rally as the Pandemic Clouds the Outlook
CRUDE OIL PRICE OUTLOOK:
- Crude oil prices pulled back slightly after surging almost 10% over the past three days
- Reflation optimism appears to be running out of steam as traders await the Jackson Hole symposium
- WTI is trending lower within a “Descending Channel”, underscoring a downward trajectory
Crude oil prices pulled back slightly during Thursday’s APAC mid-day session, pausing a three-day rally. Prices gained almost 10% this week after the FDA granted full approval to the Covid-19 vaccine developed by Pfizer and BioNTech. Lingering viral concerns and extended lockdowns dampened the prospects of global energy demand, pulling oil prices down from July’s peak.
Meanwhile, investors are eyeing the Jackson Hole symposium for clues about the Fed’s tapering timeline.Fed Chair Jerome Powell will give a speech at the Fed’s annual economic symposium on Friday. Global investors will watch closely whether the central bank is planning to scale back the $120 billion per month in asset purchases by the end of this year.
Across the Pacific, China continued to adopt tight travel restrictions and impose lockdowns in areas where Covid-19 infections were found, although the pandemic has largely been put under control. In Australia, New South Wales (NSW) reported 1,029 new locally transmitted cases of Covid-19 and three deaths on Thursday, while extending the lockdown in the region until September 10th. This may cast a shadow over the energy demand outlook in the region.
Daily New Covid-19 Cases in NSW
Technically, WTI is trending lower within a “Descending Channel” as highlighted on the chart below. The upper and lower bound of the channel may be viewed as immediate resistance and support levels respectively. The trio of short-, medium- and longer-term SMA lines are about to form a “Death Cross”, underscoring a downward trajectory. The MACD indicator is trending lower, suggesting that bearish momentum is still dominating.
WTI Crude Oil Price – Daily Chart
--- Written by Margaret Yang, Strategist for DailyFX.com
To contact Margaret, use the Comments section below or @margaretyjy on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.