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
EUR/USD
Bullish
Oil - US Crude
Mixed
Wall Street
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Mixed
More View more
Real Time News
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.36%, while traders in France 40 are at opposite extremes with 70.16%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/HYs8jzZrmf
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.19% 🇦🇺AUD: 0.11% 🇨🇦CAD: 0.09% 🇨🇭CHF: 0.05% 🇯🇵JPY: 0.03% 🇬🇧GBP: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/Jntw19iZKD
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.41% France 40: 0.22% Germany 30: 0.21% US 500: 0.15% FTSE 100: 0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/uA7dhYQvQx
  • Chinese stocks rallied following PBOC's liquidity injection: - CSI 300 (+1.49%) - Hang Seng Index (+1.16%) - Hang Seng Tech Index (+2.23%) https://t.co/7j4DJu6YZD
  • There are three major forex trading sessions which comprise the 24-hour market: the London session, the US session and the Asian session. Learn about the characteristics of each session here: https://t.co/reRmDe1Ksp https://t.co/hwp2EU0zEm
  • "Wall Street Futures Update: Dow Jones (+0.39%) S&P 500 (+0.12%) Nasdaq 100 (+0.04%) [delayed] -BBG"
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 0.61% Gold: 0.23% Oil - US Crude: 0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/UQpIKV2jEZ
  • Natural gas prices have recaptured a key trendline after a major heatwave sent energy demand in the United States soaring. Get your market update from @FxWestwater here:https://t.co/7DdcMrObKp https://t.co/G3OuF7Y5IB
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.17% 🇦🇺AUD: 0.11% 🇪🇺EUR: 0.10% 🇬🇧GBP: 0.06% 🇨🇦CAD: 0.04% 🇯🇵JPY: 0.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/lqLaaO04eh
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 90.38%, while traders in France 40 are at opposite extremes with 70.61%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/KYpAOemcJX
Crude Oil Forecast: Rebound Heads Towards Overhead Supply

Crude Oil Forecast: Rebound Heads Towards Overhead Supply

Christopher Vecchio, CFA, Senior Strategist

Crude Oil Price Forecast Overview:

  • Crude oil prices have been clawing their way higher after the rollover from the May to June WTI contracts, when spot prices dipped into negative territory as US storage facilities proved fully saturated.
  • Heightened uncertainty in financial markets due to increasing macroeconomic tensions decreases theoretical demand for energy; The Great Lockdown has yielded the weakest demand environment for energy since World War II.
  • Recent changes in retail trader positioninggives us a mixed bias towards crude oil prices.

Crude Oil Prices Continue to Rebound

Crude oil prices have been clawing their way higher after the rollover from the May to June WTI contracts, when spot prices dipped into negative territory as US storage facilities proved fully saturated. But amid signs that developed economies in Asia, Europe, and (hopefully) North America are slowly re-opening, traders are pushing crude oil prices higher in a speculative hope that demand for energy will rebound quickly. As impressive as the recent rebound may be, however, a supply of significant overhead resistance may cap gains soon.

Oil Volatility Slumps, Oil Prices Rally

Crude oil prices have a relationship with volatility like most other asset classes, especially those that have real economic uses – other energy assets, soft and hard metals, for example. Like how bonds and stocks don’t like increased volatility signaling greater uncertainty around cash flows, dividends, coupon payments, etc.crude oil tends to suffer during periods of higher volatility. Heightened uncertainty in financial markets due to increasing macroeconomic tensions decreases theoretical demand for energy; The Great Lockdown has yielded the weakest demand environment for energy since World War II.

Read more: How Do Politics and Central Banks Impact FX Markets?

OVX (Oil Volatility) Technical Analysis: Weekly Price Chart (May 2007 to May 2020) (Chart 1)

oil volatility, oil volatility chart, oil volatility forecast, oil price volatility, oil coronavirus, oil covid-19

Oil volatility (as measured by the Cboe’s gold volatility ETF, OVX, which tracks the 1-month implied volatility of oil as derived from the USO option chain) was last spotted trading at 110.18, well off of its all-time absolute high set on April 21 at 517.19, and still considerably below the all-time closing high (also established on April 21) at 325.15. Oil volatility is closer to its coronavirus pandemic low (92.48 set on March 10) than it is to the highs.

The 5-day correlation between OVX and crude oil prices is -0.92 while the 20-day correlation is -0.63; and one week ago, on April 27, the 5-day correlation was -0.54 and the 20-day correlation was -0.59. If it’s typical to see oil volatility and oil prices share an inverse relationship, it would appear that this sense of normalcy is returning: a continued drop in oil volatility may allow for further near-term gains by crude oil prices, even if the scope of a significant recovery remains limited.

Crude Oil Price Technical Analysis: Daily Chart (May 2019 to May 2020) (Chart 2)

oil price, oil technical analysis, oil chart, oil price forecast, oil price chart, crude oil, crude oil price, oil price today

It may be the case that crude oil prices have some room to trade higher in the very near-term, but not much beyond a few more dollars higher per barrel. On the CFD contract, the low established during the May WTI contract moving into negative territory was 0. To this end, the Fibonacci retracement taken from the 2020 high at 65.62 to the contract low at 0 suggests that crude oil prices are approaching the 38.2% retracement of the recent move at 25.07.

The overhead resistance area that crude oil prices are approaching cannot be understated. Besides from another important Fibonacci retracement, crude oil prices will need to contend with several important swing lows established over the past decade. Thus, while short-term momentum may be turning more bullish (see: daily MACD and Slow Stochastics), the confluence of resistance nearby suggests that the rally may cool off after a bit more topside action.

Crude Oil Price Technical Analysis: Weekly Chart (March 2003 to May 2020) (Chart 3)

oil price, oil technical analysis, oil chart, oil price forecast, oil price chart, crude oil, crude oil price, oil price today

The longer-term chart highlights the damage done to crude oil prices in recent weeks. The losses around the coronavirus pandemic saw the 11-year symmetrical triangle yield a downside breakout, and crude oil prices have yet to recover in a meaningful manner. Marking a Fibonacci retracement using the high (2011) and low (2020) of the past decade, the 23.6% retracement comes in at 27.10.

Coupled with former support in the symmetrical triangle dating back to the 2009 and 2016 lows, it would appear that crude oil prices are approaching what very well may be the sentimental breaking point for traders: through this resistance, optimism flourishes; failure may be lead to frustrating sideways price action.

IG Client Sentiment Index: Crude Oil Price Forecast (May 4, 2020) (Chart 4)

igcs, ig client sentiment index, igcs oil, igcs crude oil, oil price, crude oil price, oil price forecast, crude oil price forecast, oil technical analysis, crude oil technical analysis

Crude oil: Retail trader data shows 51.83% of traders are net-long with the ratio of traders long to short at 1.08 to 1. The number of traders net-long is 9.51% higher than yesterday and 23.21% lower from last week, while the number of traders net-short is 6.79% higher than yesterday and 15.49% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests crude oil prices may continue to fall.

Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed crude oil trading bias.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

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

DISCLOSURES