Crude Oil Outlook: Week Ahead

Key Events for the Week Ahead

Crude Oil Inventories (Wednesday)
US Prelim GDP (Thursday)
US Core PCE (Friday)
Chinese Manufacturing and Non-Manufacturing PMI (Saturday)

Fed Powell’s Latest Remarks

Focus is shifting away from inflation trends to gauge the confirmation and magnitude of the next policy decision on September 6. Chair Powell has clearly indicated the beginning of a monetary easing cycle in September with a likely 25 basis point cut, assuming the latest economic data aligns with expectations. The emphasis is on the labor market, as the Fed aims for conditions away from further cooling.

Chinese Economic Data

As one of the major factors influencing oil’s recent downturns, upcoming data from the Chinese economy will be fundamental. Scheduled for Saturday, the Manufacturing and Non-Manufacturing PMI figures will provide insight into the strength of China’s industrial activity. While weakness is evident in the manufacturing sector, non-manufacturing PMIs are showing expansion above the 50-mark.

Technical Outlook

Analyzing the US Dollar Index:

Crude Oil Outlook: DXY – 3 Day Time Frame – Log Scale

Source: Tradingview

The Fed's announcement of monetary easing has pushed the US Dollar Index back to its December 2023 lows, with the Relative Strength Index (RSI) on a 3-day time frame also nearing oversold levels last seen in January 2018. Without a clear catalyst for reversal, the next level to watch is the July 2023 low.

Crude Oil Perspective

Crude Oil Outlook: USOIL – 3 Day Time Frame – Log Scale

Source: Tradingview

The decline in the US Dollar, coupled with bullish sentiment surrounding potential upcoming stimulus, has allowed crude oil to rebound from its 2024 lows and return to the consolidation zone. Currently positioned near the lower boundary of its consolidation around the 75-resistance zone, there is still a possibility of a pullback towards the lower 70 range. However, the upcoming week's data—including crude oil inventories, US GDP, US Core PCE, and Chinese Manufacturing PMIs—will offer a more definitive insight into oil demand, moving beyond speculative projections.

• Bearish Projections: A drop below the 70-69 barrier is expected to align with support zones at 65 and 60-58.

• Bullish Projections: A rise above the 76 zone is expected to align with resistance levels near 77.90 and 80.

--- Written by Razan Hilal, CMT – On X: @Rh_waves

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.