CRUDE OIL OUTLOOK:
- Crude oil prices idle below $ 70 / bbl as US job data converge
- Soft payroll calculations combined with higher wage inflation can put sales pressure on us
- Exceeding the graph support above $ 66 / bbl may confirm the continuation of the downward trend
Crude oil prices is idling below $ 70 / bbl, which repeats the broad stagnation of most benchmark assets. It seems that the markets are after holding Friday Fed-inspired fireworks, pending further substantive guidance on the direction of US monetary policy.
This is likely to come in the form of the August US Employment Report. This is expected to slow down recruitment, with a 750,000 rise in payrolls a weaker figure from May. However, the unemployment rate appears to be falling, while wage inflation remains at a terrible 4%, the highest level in four months.
Overall, this seems to suggest that declining recruitment may reflect labor shortages rather than weakening workers’ appetites. This would increase the already growing signs of economic growth due to rising prices and could encourage the Fed to continue to reduce its purchases of QE assets.
Indeed, the interpretation of the “fool” speech given by Fed President Powell at the Jackson Hole Symposium may encourage policymakers to take action. The fact that he did not panic, saying that the narrowing could begin this year – a culminating escalation of official rhetoric – signals that markets have adapted to the idea of reducing stimulus.
Crude oil responded negatively (albeit briefly) to Wednesday’s wet ADP recruitment data. A similar result in the headline payroll publication may be exacerbated by upward pressure US dollar if the whole report provokes aggravating speculation.
TECHNICAL ANALYSIS OF CRUDE OIL
Crude oil prices have remained below resilience, leading to a downward trend since early July. The support is 66.35-68.00 In the area. Going back down may bring the test back support shelf at 61.56, may be with little friction in the years 63.53-81 on the way to the zone.
Confirming a strong rise seems to require a closes daily at 69.77-70.80 price block. From there, WTI agreement may extend upwards to challenge the 72.17-78 inflection area on the road swing high 74.23
The crude oil price chart is created using TradingView
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– Written by Ilja Spivak, Chief Strategist of APAC, DailyFX
Use the comments section or below to contact Ilja @IlyaSpivak Twitter