Crude oil, stocks, market sentiment, Covid – talking points
- Raw and Brent oil next to market sentiment
- Energy traders are preparing a US environmental impact assessment inventory report
- Crude oil prices are rising but are coming backwards
The widespread return to sentiment, backed by declining fears of a rise in the Covid cases, pushed up energy prices overnight, including benchmarks for crude oil and Brent oil. Prices seem to be breathing in Wednesday’s Asia-Pacific trading session, but last week’s loss is almost the opposite. The American Petroleum Institute (API) deceived analysts’ expectations earlier, leaving prices more vulnerable to broader risk trends.
The sentiment that allowed prices to rise is still susceptible to the same reasons – Covid and the resulting closures – that dampened optimism last week. Energy traders, together with equity and bond investors, are likely to monitor deteriorating developments. Particular attention will be paid to those that may force government policymakers to increase restrictions.
This means that traders in the Asia-Pacific region saw several shots this morning. This morning, the State of New South Wales (NSW), Australia, reported 919 new cases of Covid in 24 hours to 8pm local time. That’s 753 in the last 24 hours. Hospitalization also increased from 648 to 608. 40 people are in the fans, out of 34.
In the meantime, New Zealand reported 62 new local cases. These numbers are a bad promise for the countries of Trans-Tasman. If the worrying trends continue, this is likely to lead to further closure extensions. This could be a potential catalyst for another risk factor that could drag on oil prices.
Commodity and Brent traders are looking at tomorrow’s oil inventory report. The US Energy Information Administration (EIA) publishes its weekly oil status report, which includes stock levels for crude oil and other fuel products. Analysts expect crude oil stocks to fall by 2.3 million barrels in the week ending August 20, according to a Bloomberg study. A better-than-expected figure shows that oil continues to move upwards, but API figures provided a bearish preface to consider so far.
Technical forecast of crude oil
Prices pushed up the overnight 100-day moving average (SMA), coinciding with the trend line that provided support until last week. This region seems to be acting as a merging resistance. The MACD oscillator is approaching the rising signal, the signal line is waiting to switch from the MACD line. A break above the elevated obstacles can be seen in the fact that prices are psychologically under pressure 70. Alternatively, a few drops lower may see bears taking the wheel again in a short time.
Crude oil daily schedule
The chart is created using TradingView
Crude Oil Trade Resources
– Written by Thomas Westwater, DailyFX.com analyst
Be in touch Thomas, use the comments section below, or @FxWestwaterTwitter