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Summer Demand Driving Crude
Crude prices remain well bid as we move through early European trading on Tuesday. The futures market is now up around 15% off the June lows and prices look poised to continue higher near-term. Summer demand expectations have been a key driver behind bullish oil sentiment in recent weeks. The summer travel period in the US and Europe is typically a period of elevated demand for fuel. Additionally, heightened uncertainty around the Russia/Ukraine conflict and ongoing violence in the Middle East is also helping keep oil prices underpinned.
US Weather Disruption
In the US, fears of supply disruptions linked to Hurricane Beryl are also helping drive oil prices higher. Indeed, the rally in oil prices currently comes despite the ongoing strength we’re seeing in USD. DXY remains around the 106-mark as traders wait for the FOMC minutes tomorrow and the latest jobs report due on Friday. While the minutes are likely to be hawkish, the bigger focus will be on Friday’s data. If we see any surprise downside in the readings, this should bolster September easing expectations, weighing on USD near-term and creating deeper support for oil prices. Only a strong upside surprise and a fresh rally in USD looks likely to temper the current rally.
Technical Views
Crude
The rally in crude has seen the market breaking back above the 82.59 level and back into the broken bull channel. The bear trend line from last year’s highs will be the initial challenge for bulls but with momentum studies bullish, focus is on a test of 87.63 next. To the downside, 77.64 remains the key support to note.
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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.