Crude Oil Update: Returning to the 2024 Starting Point

Key Points:

US Job Sector Revision Matches 2009 Statistics
Crude Oil Inventories Drop Below Expectations
Flash Manufacturing and Services PMIs in Focus Today
Technical Analysis

Recent data from the Chinese economy has hit lows not seen since 2009, and the latest revision of US job market growth aligns with those 2009 figures as well, pushing oil prices back to their 2024 starting point. Despite a significant drop in crude oil inventories—falling to 4.6M barrels, well below the expected 2M barrels—the oil market's trend remains more influenced by the broader global economic outlook.

Today's Flash Manufacturing PMI reports from France and Germany fell below expectations, indicating contraction in their industrial sectors. Meanwhile, France’s Flash Services PMI stood out by retesting April 2023 highs, highlighting the ongoing challenges in the services sector amid disinflationary efforts. Attention now turns to upcoming PMI results from the UK and US, which will provide further insight into industrial activity ahead of Powell’s address at the Jackson Hole Symposium tomorrow.

Technical Outlook

Crude Oil Update: USOIL – 3 Day Time Frame - Log Scale

Source: Tradingview

As oil prices return to yearly lows and the mid-channel zone, the trend faces a critical juncture: either continuing its decline towards the $60 price range or stabilizing above the $70 mark until a bullish catalyst emerges.

Current pullbacks are confined within the $75 and $80 range, with continued bearish projections below the $70 mark aligning with Dec 2023 lows near the 69 zone, and further aligning with zones 65, 60, and 58.

Crude Oil Update: USOIL – Weekly Time Frame - Log Scale

Source: Tradingview

From a weekly time-frame perspective, oil is currently hovering near the 50% Fibonacci retracement level of the uptrend that spanned from the lows of April 2020 to the highs of June 2022. This 50% retracement level, situated around the $70 zone, serves as a crucial support area, indicating potential stability before the trend continues towards the next Fibonacci levels. These levels include the 55% retracement at the $65-$64.80 zone and the golden 61.8% retracement at the $58-$57.70 zone, respectively.

In addition to the bearish projections, close attention is being paid to any potential market interventions or bullish catalysts that could trigger unexpected upturns.

--- 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.