Middle East Impact
After a soft start to the week, oil prices have seen a stark shift in sentiment with crude futures reversing sharply higher. The market is now up almost 6% off the weekly lows. The reversal higher comes amidst heightened uncertainty over conflict in the Middle East. Reports are doing the rounds claiming that Iran is preparing to launch a fresh counterstrike against Israel from within Iraqi territory. The risk of an escalation of the conflict there remains a key threat to the global supply picture with oil prices vulnerable to sharp upside moves on any news of disruption to oil production/distribution infrastructure.
NFP & USD
Away from the conflict in the Middle East, traders will be keeping a close eye on the US Dollar today. If we see a weaker NFP print as expected, particularly if data undershoots forecast, a softer US Dollar should help lift oil prices further near-term. With the advance GDP reading earlier in the week coming in below forecasts, a soft number today should help drive December easing expectations higher, creating better demand for commodities.
US Elections
Looking ahead, focus will then shift to the US elections next week. The so-called ‘Trump trade’ impact has been largely supportive of the Dollar and weaker for commodities prices. If Trump is elected again, this dynamic looks set to continue near-term while a Harris win should be more positive for commodities, leading to a softening of the US Dollar.
Technical Views
CL
The sell off in crude has stalled once again into the 67.45 level with the bear channel lows offering further support. While this area holds, focus is on a test of the 72.61 level next with a break above seen opening the way for a test of 77.64 next. To the downside, 63.83 is next support to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.