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Crude Oil Holds Ground as Inventory Data Builds and US Dollar Dips. Will WTI Go Higher?

Crude Oil Holds Ground as Inventory Data Builds and US Dollar Dips. Will WTI Go Higher?

Daniel McCarthy, Strategist

Crude Oil, US Dollar, WTI, Brent, Hang Seng, USD/JPY, Gold - Talking Points

  • Crude oil has held firm as supply and demand issues swirl
  • APAC equities are in the green, but post-market US earnings are a drag
  • If mild conditions persist across the EU and US, will WTI slump?

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Crude oil is slightly softer today after inventory data showed that stockpiles rose by 4.5 million barrels last week, well ahead of 200k anticipated from the American Petroleum Institute (API) report.

This will place significant focus on the government's Energy Information Administration (EIA) official U.S. stockpile report that is due later today.

The OPEC+ production cuts appear to play off against slower global growth concerns emanating from China and tight monetary policy across much of the world.

The WTI futures contract is just under US$ 85 bbl while the Brent contract is nearing US$ 93 bbl.

Elsewhere, Microsoft, Alphabet and Texas Instruments reported disappointing results after the close and futures are indicating a sluggish start to the Wall Street cash session.

APAC equity markets were all in the green. An exception was Korea’s tech heavy Kosdaq index that slipped a touch.

Hong Kong’s Hang Seng Index (HSI) and mainland China’s CSI 200 have recouped only a fraction of the losses seen in the aftermath of President Xi Jinping’s concentration of power at the Communist’s party congress at the start of the week

Treasury yields dipped overnight, particularly from 5-years and beyond with the benchmark 10-year note sliding to 4.05% at one stage.

The US Dollar is also weaker across the board compared to yesterday, but it is relatively stable so far today. USD/JPY is stable today, slightly above 148.

The Australian Dollar eventually got a small boost from CPI coming in above expectations. Headline CPI was 7.3% year-on-year to the end of October and the focus now turns toward next Tuesday’s RBA meeting.

The market was little moved by the data and maintained the pricing of a 25 bp hike there. The 3- and 10-year Australian Commonwealth Government bond (ACGB) both saw higher yields, with the 3-year note adding around 15bp over 3.50%.

The US will see mortgage and new home sales data later today, while the Bank of Canada will make a decision on interest rates. According to a Bloomberg survey of economists, the market is anticipating a 75 basis point boost.

The full economic calendar can be viewed here.

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WTI CRUDE OIL TECHNICAL ANALYSIS

WTI looks to be in a range trading environment, holding between 81.20 and 87.12 for more than a week.

A break above the 55-day term simple moving average (SMA) could indicate emerging bullish momentum as it would confirm a move above the shorter term 10- and 21-day SMAs

Resistance could be at the break points near 90.50 or further up at the recent peak of 93.64.

On the downside, support may lie at the recent low and break point of 81.20.

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Chart created in TradingView

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

Please contact Daniel via @DanMcCathyFX on Twitter

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

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