Crude Oil Outlook: The Market Rebounds and Oil Follows
- The broader market rebounds, oil follows
- Middle East tensions are increasing speculation on oil trades
- Positive economic activity in the services sector halted the market’s price drop
- Crude oil inventories are in focus tomorrow after a 5-week streak of declining inventories
With the VIX recording historical highs, investor attention shifts towards opportunities to buy the dips, forecasting an upcoming reversal for the sharp market drops.
The exhausted bearish momentum yesterday met a greater-than-expected reading for the ISM Services PMI, which was previously retesting 2020 levels, supporting a halt and a positive rebound for the market drops.
The next question is whether the latest rebound is sustainable or just a correction along the downtrend.
Calls for an emergency rate cut to avoid a potential recession in the US are making headlines, adding further bearish pressures on the US dollar index. However, escalating tensions in the Middle East could revive the role of the dollar as a safe haven asset and boost its positive trends again alongside that of oil.
Beyond the state of US economic growth, US crude oil inventories will be in the headlines tomorrow after recording greater-than-expected results in negative inventory territory throughout July.
Technical Outlook
Crude Oil Outlook: USOIL – 3 Day Timeframe – Log Scale
Source: Tradingview
Breaking below the 5-wave triangle, oil entered a bearish territory and retested the 2024 starting point. Given the higher-than-expected ISM Services PMI along with escalating tensions in the Middle East, upward trends can be seen on the oil charts back towards levels 76.30, 77.80, and 79.40, provided it closes back in the triangle above 75.
Continuing through the bearish track and closing below 69, the next projected levels for oil can align with levels 65.60 and 60.60, respectively.
--- Written by Razan Hilal, CMT
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2024