18.78 0.00 (0.00%)
After hours: 4:17PM EDT
|Bid||0.00 x 800|
|Ask||0.00 x 1000|
|Day's Range||18.63 - 18.81|
|52 Week Range||14.58 - 24.41|
|PE Ratio (TTM)||N/A|
|Beta (3Y Monthly)||2.08|
|Expense Ratio (net)||0.90%|
Speculative money is flowing into the crude oil markets on Monday in reaction to escalating tensions between the UK and Iran. Falling supply in the region could help underpin prices, but it is going to take a long-term supply disruption to trigger a lengthy rally.
Markets have started the week under pressure. Expectations that the Federal Reserve will cut interest rates by 50 points in July collapsed from 60% to 23%.
Traders will be watching the developments in the Middle East between the UK and Iran, and the US Navy and Iran, however, we’re not likely to see an extended rally unless military action leads to a supply disruption.
It’s a big week ahead for the markets. Earnings, economic data, Iran, trade war chatter, and the ECB are all in focus.
Gold remained underpinned by expectations of a 25-basis point rate cut by the U.S. Federal Reserve, and capped by low expectations of a 50-basis point rate cut by central bank policymakers. The speculative buying in crude oil came to a screeching halt last week when the U.S. announced that Iran was willing to talk about its nuclear program. The problem for bullish natural gas traders is the heat is moving too quickly to feed lingering periods of high demand.
Crude oil markets got absolutely hammered during the week, as a lot of the tension between the Americans and the Iranians seems to be going away, or at least the markets paying much less attention to them. That being said, we also have that pesky little problem with global growth.
Friday was relatively quiet in the crude oil markets, at least in comparison to the rest of the week. We are sitting on a certain amount of support, but at the end of the day the reality is that we are in a negative market.
Oil has indeed plunged yesterday, yet caught a bid earlier today on the news of the downed Iranian drone. While that’s encouraging to the bulls, they didn’t celebrate the following upswing for too long.
Escalating tensions between the U.S. and Iran could underpin prices today, but gains are likely to be limited by concerns over demand. Furthermore, don’t expected a prolonged rally unless there is an actual supply disruption in the region, especially after bullish speculators were blown out of the market earlier in the week.
Crude oil markets try to rise initially during the trading session on Thursday but then turned around to show signs of weakness yet again. This is a market that continues to struggle in general, as the fundamental outlook for the market is getting weaker.
The wildcard is US-China trade relations. Reports say the two sides aren’t making any progress and may be hung up over the US treatment of Chinese communication Huawei. If the talks break off then tensions over lower demand will rise again, and we’re likely to see another round of selling pressure on global economic growth concerns.
Based on Wednesday’s close at $63.66 and the early price action, the direction of the September Brent crude oil futures contract today is likely to be determined by trader reaction to the uptrending Gann angle at $63.32.
The crude oil markets try to rally initially during the trading session on Wednesday but then gave back the gains as we continue to see a lot of exhaustion. At this point, crude oil looks very vulnerable.
The tone in the crude oil markets shifted from slightly positive to negative with the announcement of possible talks between the U.S. and Iran. Later today at 14:30 GMT, the U.S. Energy Information Administration (EIA) will release its weekly inventories report. It is expected to show yet another drawdown. However, it probably won’t be big enough to recover yesterday’s steep loss.
Markets continue to receive conflicting signals, but a wary mood prevails. Charles Evans from the Fed pointed to the possibility of reducing the rate immediately by 50 points in July, citing the risks of a global slowdown
Crude oil markets recovered a bit during the Tuesday session, after testing support below. That being the case, it looks as if we are still trying to figure out where to go longer-term.
There were some encouraging economic data points and some disappointments out of China Monday, but oil exchange traded funds barely responded with the United States Oil Fund (USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (BNO) , which tracks Brent crude oil futures, trading slightly lower early in the session. The International Energy Agency projects consumption to increase each quarter of 2019 year-over-year, albeit at a slower-than-usual pace for the first quarter.
On Monday, Brent crude oil active futures settled $6.9 higher than the WTI crude oil active futures. On July 8, the spread was at $6.45.
With short-term bullish events like the hurricane or a dispute in the Middle East subsiding, traders are being forced to look at the dominate supply and demand factors. And the picture they are painting is bearish.
Crude oil markets did very little during the trading session on Monday, as we await some type of momentum to get this thing going. In the short term, it looks like we are simply waiting for a catalyst.
Most of the factors that drove prices higher last week were short-term events so if they go away, prices could break. Weighing on prices will be increasing worries over demand as signaled last week by OPEC and the International Energy Agency (IEA).
Bullish traders should be a little nervous early in the week because of uncertainty over flood damage from Hurricane Barry. If the flooding caused little or no damage, which would delay production, then prices could retreat as buyers trim positions placed ahead of the hurricane.
It’s a big week ahead, with key stats, corporate earnings, and geopolitical risk to provide the majors with direction through the week.