Crude Under Pressure
Following a solid rally at the start of the week, oil prices have run into heavy selling interest over the week. Crude futures are down around 6% from the week’s highs as demand concerns resurface. At the start of the week, crude prices were higher amidst elevated fears that Iran was set to launch an imminent retaliation against Israel. However, with a counter attack yet to happen, focus has shifted a little across the week with some players now likely suspecting that Iran has backpedalled on retaliation plans. However, it is worth noting that the situation is still incredibly volatile and oil prices remain highly vulnerable to upside risks should news of a retaliation break in coming days.
US Demand Concerns
Alongside the impact from shifting geopolitical risks, crude prices have also fallen this week on a renewed focus on demand concerns. The EIA reported an unexpected inventories surplus over the last week, despite expectations for a further drawdown. The data reflects a weaker demand backdrop in the US, despite the summer driving season being in full swing. With jobs data trending lower recently, recessionary fears have created fresh headwinds for oil prices. With the demand outlook already weaker due a drop in Chinese activity, the market is highly sensitive to any signs of a potential US downturn.
Technical Views
Crude
The reversal lower in crude this week has seen the market breaking back under the 77.64 level. While below here and with momentum studies fading quickly, focus is on a fresh test of the 72.61 level and the bear channel lows beneath with 67.45 the deeper bear target.
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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.