For the week, all eyes are on the Fed, which makes its rate cut decision on Wednesday. The trade is split between a 25bps or 50bps cut from the Fed, with probabilities slightly favoring a 50bps cut.
WTI Crude Oil (October)
Yesterday’s close: Settled at 68.65, down 0.32 on Friday and up 0.98 on the week
WTI rallied 0.98 [+1.4%] last week as a general risk-on tone swept through markets. The October contract is up +0.72 [+1.05%] to start the week. Headlines surrounding today’s early move remain the same – traders weighing the loss of Libyan barrels vs deepening economic concerns out of China.
For the week, all eyes are on the Fed, which makes its rate cut decision on Wednesday. The trade is split between a 25bps or 50bps cut from the Fed, with probabilities slightly favoring a 50bps cut.
Last week’s Commitment of Traders Report titled bullish Crude, as managed money printed a net short position in Brent for the first time on record [reporting started 2011].
We anticipate a choppy week in crude markets as the trade digests continued geopolitical developments, a 2nd assassination attempt on Trump, and central bank decisions in the US, Brazil, Australia, the U.K. and Japan. The Chinese central bank will also set their 5-year and 1-year prime rates, and a slew of ECB speakers are scheduled.
Caution and selectivity in positioning are advised for the week, as volatility will likely be amplified.
Despite Friday’s soft tape, we chalk it up to a failed first retest of the psychological $70 mark and strong resistance. If price action can hold our Pivot and point of balance at 69.20-69.39, we believe it would stoke higher prices. Below there our major three-star support will help define an elevated floor at….
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