Market Drivers

On the backdrop of a consensus among traders and analysts, the OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia, is expected to maintain its voluntary production cuts. These cuts sum up to approximately 2.2 million barrels per day (bpd). This decision aims to stabilize the market and avert further downward pressure on prices, which have compelled several producers to accrue more debt and delay key projects.

Policy and Production Adjustments

OPEC+ has rescheduled its pivotal output policy meeting to June 2, transitioning from an in-person gathering in Vienna to a virtual format. This adjustment allows for continued strategic discussions as the group solidifies its stance on extending the current output restrictions. These include an additional 3.66 million bpd cuts, bringing the total to about 5.86 million bpd, representing roughly 5.7% of global daily demand.

Demand Indicators and Market Sentiment

The onset of the northern hemisphere’s summer has traditionally boosted demand for road and aviation fuels. Early signs of robust U.S. holiday travel during the Memorial Day weekend, marked by increased road trips and strong air travel figures, are supporting crude prices. Furthermore, market participants are closely monitoring U.S. crude inventory data, with forecasts suggesting a decrease in stockpiles, which could further tighten the market.

Market Forecast: Bullish

Looking ahead, the oil market exhibits a bullish outlook as the combined effect of sustained production cuts and a resurgence in demand could continue to push prices upward. The forthcoming OPEC+ meeting will be crucial in shaping short-term price movements, with a likely extension of cuts supporting higher price levels. Investors should also keep an eye on U.S. inflation data due later this week, which might influence market expectations regarding interest rate adjustments and subsequently, oil prices.

Technical Analysis

Natural gas markets have pulled back during the trading session on Tuesday to reach down towards the 50 day EMA yet again. This is an indicator that seems to be like a magnet for price in this market, so of course it does make sense that we would find a way back down here. Ultimately, I think that we eventually go higher in the short term, due to the fact that there will be much more demand for natural gas as cold temperatures slam into the United States. That being said, I still do not know whether or not we can make a fresh, new high but clearly that would be the hope of bullish traders. It all comes down to weather and forecasts, especially around the New York, Boston, and Washington DC areas. Remember, natural gas tends to be a very localized market.

NATGAS Video 02.12.20

To the downside, I see the $2.60 level is essentially the short term “floor” in the market, but I still prefer buying dips regardless. I have no interest in shorting natural gas until we start trading spring contracts, so this is a one-way trade as far as I am concerned. Currently, we are trading the January 2021 contract and that of course does imply that there would be a certain amount of demand going forward. As long as that is going to be the case, I think we have to look at this as a market that still has a lot of upward possibilities, and need to ignore selling opportunities, lease for the time being. Ultimately, I am bearish in natural gas longer term but over the next month or two I will continue to favor the upside.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE:

Natural gas markets have rallied significantly during the course of the trading session on Friday, breaking above the 50 day EMA and clearing the $5.25 level. Because of this, the market looks as if it is ready to continue the upward march, but we need to take out that shooting star from last week and order to have the “all clear” for much bigger move. Ultimately, this is a market that I think will continue to be a “buy on the dips” scenario as the temperatures plunge again, and of course there are concerns about overall attitude of the reopening trade. Ultimately, I think natural gas continues to be one of the better trade for the next month or so.

NATGAS Video 29.11.21

Keep in mind that the markets will continue to see a lot of support underneath, especially near the $4.75 level. The temperatures are starting to drop again in the United States, so that of course helps the situation. Natural gas tends to move on the latest weather report, so you need to be aware of that as well. All things been equal, this is a market that I think continues to see a lot of noise, but more upward pressure than down over the next few weeks. Eventually, we will start trading the spring contracts, but we are not doing so yet, so one still has to think higher more than anything else. The market tends to be very erratic, so you need to be cautious about your position size.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE:

False Breakdown Leads to Sharp Rally

Today’s advance is the third day up after crude oil triggered a false breakdown from recent consolidation last Friday. Buyers subsequently took charge and have managed to see the price of crude advance into the third day, today. The bullish continuation today has taken crude oil above both the downtrend line and purple 20-Day MA, as well as the uptrend line.

Notice that the 20-Day MA and downtrend line mark a similar price of 79.11 around the breakout area. In other words, a significant pivot level has been busted to the upside. Today bullish price action points to likely upside continuation.

Attempting Four-Week Breakout

Again, today the high is marked as potential resistance by two price levels, the most recent swing high at 80.64 and the long-term downtrend line. It is also a weekly high. The downtrend line starts from the March 2022 peak of 130.61. A decisive rally above 80.64 will trigger a bullish continuation on both the daily and weekly chart, which will be confirmed on a daily close above that price level. Once that happens, in the short term the next higher target would be the 50-Day MA at 82.04.

Watch Long-Term Downtrend Line

The long-term downtrend line has some significance for crude oil. It was initially broken to the upside on April 1, but it subsequently failed to hold as support and a breakdown occurred on April 30. That was followed by a correction to last week’s low. A second bullish breakout of a long-term trendline is bullish. That happened today and will likely be confirmed by a daily close above the line.

For a look at all of today’s economic events, check out our economic calendar.

Brent Crude Oil Technical Analysis

Brent continues to hang around the 200-day EMA as well, and if it can recapture the $84.50 level, then I think it’s likely that we will break towards the 50-day EMA. In general, I think this is a market that will be very difficult, but I also recognize that we are in an area where you would expect to see a lot of support. Because of this, I suppose it is probably thought of as a value proposition because quite frankly if we can’t pick it up soon, now that we are in the midst of driving season, that could be a bad sign.

Furthermore, you also have to keep in mind that it’s only going to take the wrong headline coming out of the Middle East to send this market straight back up into the stratosphere. So, with that, I think this is just noise, nonsense, et cetera. So, whether or not we can recapture that previous support level is what I would be watching in both grades of crude oil.

For a look at all of today’s economic events, check out our economic calendar.

XAU/USD Current price: $2,357.41

• US Consumer Confidence unexpectedly surged in May, according to CB.
• Federal Reserve officials maintained a cautious tone about inflation progress.
• XAU/USD turned neutral in the near term, needs to conquer the $2,360 threshold.

Gold kept recovering on the broad US Dollar’s weakness and regardless of the market mood, with XAU/USD trading around $2,360. The Greenback enjoyed temporal demand at the beginning of the American session, following the release of upbeat data.

The United States (US) released the S&P/Case-Shiller Home Price Index, which improved to 7.4% in March, beating expectations. Also, the Conference Board Consumer Confidence Index unexpectedly improved in May to 102.0 from an upwardly revised 97.5 in April. The Present Situation sub-index increased to 143.1 from 140.6 previously, while the Expectations sub-index rose to 74.6  from 68.8, still below the 80 threshold, which usually signals a recession ahead.

Wall Street, however, could not take advantage of the news. Following the dismal performance of their overseas counterparts, US indexes trade with a mixed tone, with the Dow Jones Industrial Average (DJIA) dipping in the red, the S&P500 hovering around its opening level, and the Nasdaq Composite up 82 points.

Meanwhile, Federal Reserve (Fed) officials delivered cautious words about inflation. On the one hand, Governor Michelle Bownan said she would have supported either waiting to slow the quantitative tightening pace or a more tapered slowing in balance sheet run-off. On the other, Minneapolis Fed’s President Neel Kashkari said the US economy has remained remarkably resilient and that he does not see a need to hurry to cut rates. He added that policymakers should not rule anything out on the monetary policy path and that he would prefer to see more months of positive inflation data before a rate cut.  

XAU/USD short-term technical outlook

XAU/USD is up for a third consecutive day. In the daily chart, technical indicators have partially lost their upward strength but hold within positive levels. At the same time, the pair is hovering around a mildly bullish 20 Simple Moving Average (SMA), while the longer moving averages head firmly north, far below the current level. The overall stance is positive, albeit the momentum is missing.

In the near term, and according to the 4-hour chart, XAU/USD has turned neutral. The Momentum indicator is flat, just above its 100 level, while the Relative Strength Index (RSI) indicator aims marginally higher at around 49. The 20 SMA heads south below the longer ones, yet the pair met intraday support around it, while a mildly bullish 100 SMA acts as dynamic resistance around $2,360.

Support levels: 2,340.20 2,325.30 2,307.10

Resistance levels: 2,364.00 2,372.90 2,384.15

XAU/USD Current price: $2,357.41

• US Consumer Confidence unexpectedly surged in May, according to CB.
• Federal Reserve officials maintained a cautious tone about inflation progress.
• XAU/USD turned neutral in the near term, needs to conquer the $2,360 threshold.

Gold kept recovering on the broad US Dollar’s weakness and regardless of the market mood, with XAU/USD trading around $2,360. The Greenback enjoyed temporal demand at the beginning of the American session, following the release of upbeat data.

The United States (US) released the S&P/Case-Shiller Home Price Index, which improved to 7.4% in March, beating expectations. Also, the Conference Board Consumer Confidence Index unexpectedly improved in May to 102.0 from an upwardly revised 97.5 in April. The Present Situation sub-index increased to 143.1 from 140.6 previously, while the Expectations sub-index rose to 74.6  from 68.8, still below the 80 threshold, which usually signals a recession ahead.

Wall Street, however, could not take advantage of the news. Following the dismal performance of their overseas counterparts, US indexes trade with a mixed tone, with the Dow Jones Industrial Average (DJIA) dipping in the red, the S&P500 hovering around its opening level, and the Nasdaq Composite up 82 points.

Meanwhile, Federal Reserve (Fed) officials delivered cautious words about inflation. On the one hand, Governor Michelle Bownan said she would have supported either waiting to slow the quantitative tightening pace or a more tapered slowing in balance sheet run-off. On the other, Minneapolis Fed’s President Neel Kashkari said the US economy has remained remarkably resilient and that he does not see a need to hurry to cut rates. He added that policymakers should not rule anything out on the monetary policy path and that he would prefer to see more months of positive inflation data before a rate cut.  

XAU/USD short-term technical outlook

XAU/USD is up for a third consecutive day. In the daily chart, technical indicators have partially lost their upward strength but hold within positive levels. At the same time, the pair is hovering around a mildly bullish 20 Simple Moving Average (SMA), while the longer moving averages head firmly north, far below the current level. The overall stance is positive, albeit the momentum is missing.

In the near term, and according to the 4-hour chart, XAU/USD has turned neutral. The Momentum indicator is flat, just above its 100 level, while the Relative Strength Index (RSI) indicator aims marginally higher at around 49. The 20 SMA heads south below the longer ones, yet the pair met intraday support around it, while a mildly bullish 100 SMA acts as dynamic resistance around $2,360.

Support levels: 2,340.20 2,325.30 2,307.10

Resistance levels: 2,364.00 2,372.90 2,384.15

Natural gas markets remain somewhat elevated after gapping higher, as weather forecasts go back and forth. It looks as if we are going to have a somewhat colder winter than what we thought previously, and of course when you look at the daily chart you can see that the bullish flag kicked off as well. Ultimately though, when we Like this it’s quite often that we need to fill that gap.

NATGAS Video 08.11.18

I don’t have any interest in shorting this market right now though, and I think we need to be very cautious in doing so. Because of this, I simply think that a pullback into this gap probably represents value the people will be willing to take advantage of, as we have seen it over extension of the bullish pressure and quite frankly we would need to pick up more traders and by orders to go higher. I don’t know how much higher we go, but clearly there is a proclivity to rally. It’s not until we would break down below the $3.15 level that the uptrend would be in danger, as it would break the bottom of the flag. That doesn’t seem very likely to happen, at least not until we start trading warmer months in the futures pits, perhaps the March contract.

I think the $4.00 level above will be a major psychological barrier to break, and quite frankly I think it would take something extraordinary to get there but then again I’m the first to admit that I didn’t think we would get here. This goes right along with the old adage “the market can remain unreasonable much longer than you can remain solvent.”

This article was originally posted on FX Empire

More From FXEMPIRE:

2024-05-27 11:01:01 ET

The Brent crude oil price drifted upwards on Monday as investors focused on the upcoming driving season in the United States. It rose for two straight days, moving to the key resistance point at $82.50, higher than last week’s low of $80.60.

Driving season ahead

The next crucial catalyst for crude oil price is the US driving season, which starts after the Memorial Holiday weekend. This season is characterised by more driving in the United States and higher demand for gasoline.

In some cases, oil prices tend to rise during the driving season, which explains why Joe Biden’s administration has announced plans to release 1 million barrels of oil. His goal is to keep gas prices lower ahead of the election in November.

The new SPR sale will push the country’s reserves to about 367 million barrels, the lowest level in decades. Biden’s administration has sold over 240 million barrels since 2020.

It is unclear whether these sales will help lower the price of Brent and West Texas Intermediate (WTI). Also, it is less certain whether demand in the driving season will drive prices higher.

The oil industry is dealing with numerous moving parts. OPEC+ has imposed a 2 million barrel a day supply cap in a bid to boost prices. At the same time, Russia is still pumping millions of barrels each day despite western sanctions.

Additionally, flash economic numbers show that the world economy is doing modestly well, a positive sign for oil. China grew by over 5% in the first quarter and its trade figures are still strong. European economies like in Germany and France have started growing, raising the possibility that the bloc will emerge from a recession.

Altogether, the Energy Information Administration (EIA) expects that the global demand will

rise to over 102.84 million barrels

a day this year.  While the

IEA has slashed its demand outlook

, it remained at 102.7 million bpd, higher than the expected supply.

Brent crude oil price forecast

Brent chart by TradingView

The daily chart shows that the price of Brent has moved sideways in the past few months. It has retreated from the month-to-date high of about $92 to the current $82.80. At the same time, the 50-day and 100-day Exponential Moving Averages (EMA) have formed a bearish crossover pattern.

Brent has also formed a symmetrical triangle pattern, which is a neutral pattern. Therefore, Brent will likely remain in a tight range during the current driving season. The key support and resistance levels will be at $79 and $92, its lower and upper sides of the triangle pattern.

The post

Brent crude oil forecast as US summer driving season starts

appeared first on

Invezz

XAU/USD Current price: $2,354.27

• Gold recovered some of the ground lost last week amid persistent US Dollar interest.
• The focus this week is on the US Personal Consumption Expenditures Price Index.
• XAU/USD struggling to extend gains in the near term, still under bulls’ control.

Gold prices are up on Monday, with XAU/USD trading at around $2,355 after the European close. The bright metal extended its Friday recovery when it slid $2,325.30, its lowest in two weeks. The tepid recovery was the result of the persistent weakness of the US Dollar, as investors keep pricing in no rate cuts from the Federal Reserve (Fed) in the upcoming two meetings. The recovery stalled amid the Memorial Day holiday in the United States (US), keeping local markets closed.

The US has a light macroeconomic calendar in the upcoming days, shifting the focus to Friday when the country will publish the April Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge. PCE inflation is foreseen to be stable at 2.7% YoY, while the core annual reading is expected to print at 2.8%, matching the March reading. Finally, the PCE Price Index is expected to have risen 0.3% MoM. Generally speaking, readings below forecast should boost the odds for a soon-to-come rate hike, while the opposite scenario will be understood as a delay in monetary tightening beyond September.

XAU/USD short-term technical outlook

From a technical point of view, the XAU/USD pair seems poised to extend its advance. The daily chart shows that tast week’s slump was enough for the pair to correct overbought conditions, and technical indicators are currently bouncing from their midlines. At the same time, the pair is recovering above a directionless 20 Simple Moving Average (SMA) while the longer moving averages accelerate their advances far below the shorter one, all of which reflects persistent buying interest.

In the near term, however, according to the 4-hour chart, the recovery stalled around a congestion of moving averages, with the 20 SMA heading firmly south and hovering around directionless longer ones. Finally, technical indicators advance, although within negative levels, falling short of supporting a continued advance.

Support levels: 2,340.20 2,325.30 2,307.10

Resistance levels: 2,358.40 2,372.90 2,384.15

XAU/USD Current price: $2,354.27

• Gold recovered some of the ground lost last week amid persistent US Dollar interest.
• The focus this week is on the US Personal Consumption Expenditures Price Index.
• XAU/USD struggling to extend gains in the near term, still under bulls’ control.

Gold prices are up on Monday, with XAU/USD trading at around $2,355 after the European close. The bright metal extended its Friday recovery when it slid $2,325.30, its lowest in two weeks. The tepid recovery was the result of the persistent weakness of the US Dollar, as investors keep pricing in no rate cuts from the Federal Reserve (Fed) in the upcoming two meetings. The recovery stalled amid the Memorial Day holiday in the United States (US), keeping local markets closed.

The US has a light macroeconomic calendar in the upcoming days, shifting the focus to Friday when the country will publish the April Personal Consumption Expenditures (PCE) Price Index, the Fed’s favorite inflation gauge. PCE inflation is foreseen to be stable at 2.7% YoY, while the core annual reading is expected to print at 2.8%, matching the March reading. Finally, the PCE Price Index is expected to have risen 0.3% MoM. Generally speaking, readings below forecast should boost the odds for a soon-to-come rate hike, while the opposite scenario will be understood as a delay in monetary tightening beyond September.

XAU/USD short-term technical outlook

From a technical point of view, the XAU/USD pair seems poised to extend its advance. The daily chart shows that tast week’s slump was enough for the pair to correct overbought conditions, and technical indicators are currently bouncing from their midlines. At the same time, the pair is recovering above a directionless 20 Simple Moving Average (SMA) while the longer moving averages accelerate their advances far below the shorter one, all of which reflects persistent buying interest.

In the near term, however, according to the 4-hour chart, the recovery stalled around a congestion of moving averages, with the 20 SMA heading firmly south and hovering around directionless longer ones. Finally, technical indicators advance, although within negative levels, falling short of supporting a continued advance.

Support levels: 2,340.20 2,325.30 2,307.10

Resistance levels: 2,358.40 2,372.90 2,384.15

The natural gas markets have broken out during the last couple of days to break above the $3.40 level, which of course is an area that has been crucial resistance multiple times in the past. Breaking above that level also represents that the market is breaking out of a major resistance level and consolidation area. The consolidation area measures for a move of $1.00 suggesting that we could go as high as $4.40 above. All things being equal, this is a market that I think continues to see a lot of volatility but given enough time I do think that we are at the very least going to go looking towards the $4.00 level above.

NATGAS Video 28.06.21

At this point in time, the market probably has a significant amount of support underneath, especially as the 50 day EMA is sitting just above the $3.00 level, which is an area that is important as well. We are clearly accelerating to the upside so now that we are in an impulsive stage, which means that the gains could come rather rapidly. With that in mind, the market is likely going to continue to see a lot of momentum jumping into the picture, so I think at this point if we do get a certain amount of a pullback, it will be limited at best.

With the heatwave out west, it does suggest that we will have more demand in the short term, but from a longer-term standpoint it is obvious that the market is still oversupplied from a structural standpoint, so I think it is only a matter of time before we fall apart. This is as much a “knock on effect” of the commodity boom than anything else and will be the first place we see cracks in it.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

More From FXEMPIRE: