The main mover this week is the Fed decision tomorrow, where traders are split between a 25bps and 50bps cut. Volatility is likely to be the theme for the week as traders try and gauge a weaker economic backdrop vs a lower interest rate environment.
WTI Crude Oil (October)
Yesterday’s Close: Settled at 70.09, up 1.44
At the time of writing, WTI Crude Oil futures are up +0.33 to 70.42 this morning. U.S. Retail Sales data was a beat at +0.1% vs -0.2% estimate.
Crude rallied yesterday on a continued slump in Libyan exports, a weak dollar, and a general risk-on trade throughout asset classes. Friday’s Commitment of Traders report also drove prices higher as managed money reported a near record net-short position in the Brent Crude Oil contract.
UN led talks between rival groups in Libya failed to break an impasse last week which has caused production and tanker loadings to falter in the country. Libyan production is now estimated around 450,000 bbls/day, down from 1,000,000 bbls/day before the crisis. Also on the supply side, around 12% of crude production in the Gulf of Mexico remains shut-in from Hurricane Francine.
Meanwhile, bears continue to point to weak Chinese economic data. Calls for increased Chinese stimulus continue, but those have fallen on nearly deaf ears for over a year now. The PBOC is scheduled to adjust their 1 Year and 5 Year prime rates Thursday night, market expectations are for them to hold those rates steady at 3.35% and 3.85%, respectively.
The main mover this week is the Fed decision tomorrow, where traders are split between a 25bps and 50bps cut. Volatility is likely to be the theme for the week as traders try and gauge a weaker economic backdrop vs a lower interest rate environment.
Friday’s high of 70.32 in WTI Crude Oil futures will stand as our Pivot and point of balance. Also, Thursday’s high will align with today’s early session low as major three-star support. Holding above these levels will leave the bulls in the driver’s seat and our Bias more Bullish. Today is option expiration for the October contract; we either seeing this provide continued tailwinds that began late last week or pinning the market to $70 and setting the stage into tomorrow’s Fed and weekly EIA data.
- Bias: Bullish/Neutral
- Resistance: 70.70-70.88**, 71.44-71.90****
- Pivot: 70.32
- Support: 69.61-69.98***, 68.47-68.61***
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