Strong Dollar Hurting Crude
Crude prices are seeing heavy selling today as a combination of a stronger US Dollar and oversupply concerns weigh on sentiment. The futures market is down almost 2% today as the reversal from around the $61 highs continued on Tuesday. On the Dollar front, a hawkish surprise from the Fed last week has driven a sharp repricing of the rates outlook, fuelling an uptick in USD which is having a sizable cross-market impact this week. With Fed president Powell cited heightened uncertainty and division mong policymakers due to the lack of data, a furtehr cut looks less likely each week the US govt shutdown continues. Against this backdrop, USD is likely to stay bid near-term, keeping oil prices capped.
OPEC+ To Pause Output Hikes
Oil prices are also being dampened this week by the latest OPEC+ news. Following several consecutive months of output increases, the group announced this week that it would pause output hikes over the early part of next year with the potential for them to be extended furtehr as the group monitors a significant build in inventories across OECD countries. The concern over supply levels has clearly spooked investors with crude being sold accordingly. As such, traders will be monitoring incoming inventory news with any fresh upside likely to put furtehr pressure on crude near-term.
Technical Views
Crude
The failure at the latest test of the 61.39 level and bear trend line suggests that fresh test of the 57.52 lows could be in store. Momentum studies are weakening here and while we remain below this resistance the YTD lows will act as a magnet around 55. Topside, bulls need to see a break of the trend line and 61.39 level to mute these downside risks.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.