Fundamental
Overview
Crude oil is finally
finding some footing this week as the dip-buyers might be looking forward to
the Fed’s easing cycle. As a reminder, the positioning in crude oil is at a
record 13 years low and the sentiment is very bearish.
These factors can generally
offer great contrarian opportunities. The main reason which could drive oil
prices higher is the imminent Fed’s easing into a resilient economy. Lower
rates generally lead to an increase in the manufacturing activity and therefore
increased demand for crude oil.
Moreover, the recent debate
between Trump and Harris might have also decreased the risk premium of higher
supply as Harris chances of winning the election according to betting markets
increased. This is just a marginal thing, but it could give the buyers a bit
more confidence.
Crude Oil
Technical Analysis – Daily Timeframe
Crude Oil Daily
On the daily chart, we can
see that crude oil recently broke through the 67.68 low and extended the drop
into the 65.31 level before reversing. The target should now be the resistance
around the 71.67 level.
That’s where we can expect
the sellers to step in with a defined risk above the resistance to position for
a drop into the 64 support zone. The buyers, on the other hand, will want to
see the price breaking higher to increase the bullish bets into the major trendline.
Crude Oil Technical
Analysis – 4 hour Timeframe
Crude Oil 4 hour
On the 4 hour chart, we can
see that the price recently broke above the minor downward trendline that was defining the bearish momentum.
The buyers started to pile in more aggressively and with the break above the
most recent lower high at 69.05 level, the short-term trend should have
switched to an uptrend.
Crude Oil Technical
Analysis – 1 hour Timeframe
Crude Oil 1 hour
On the 1 hour chart, we can
see more clearly the recent price action and the break above the 69.05 level
yesterday. We got a bit of a consolidation around the level, but the bullish
momentum seems to be increasing.
We now have a minor upward
trendline defining the bullish momentum and we can expect the buyers to keep
leaning on it. The sellers, on the other hand, will want to see the price
breaking below the trendline and the 69 handle to position for a drop back into
the lows. The red lines define the average daily range for today.
Upcoming
Catalysts
Today we conclude the week with the University of Michigan Consumer Sentiment
report which is expected to print at 68.0 vs. 67.9 last month.