CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Crude Oil Outlook: The Market Rebounds and Oil Follows

Article By: ,  Market Analyst
August 6, 2024 10:58 AM
  • The broader market rebounds, oil follows
  • Middle East tensions are increasing speculation on oil trades
  • Positive economic activity in the services sector halted the market’s price drop
  • Crude oil inventories are in focus tomorrow after a 5-week streak of declining inventories

With the VIX recording historical highs, investor attention shifts towards opportunities to buy the dips, forecasting an upcoming reversal for the sharp market drops.

The exhausted bearish momentum yesterday met a greater-than-expected reading for the ISM Services PMI, which was previously retesting 2020 levels, supporting a halt and a positive rebound for the market drops.

The next question is whether the latest rebound is sustainable or just a correction along the downtrend.

Calls for an emergency rate cut to avoid a potential recession in the US are making headlines, adding further bearish pressures on the US dollar index. However, escalating tensions in the Middle East could revive the role of the dollar as a safe haven asset and boost its positive trends again alongside that of oil.

Beyond the state of US economic growth, US crude oil inventories will be in the headlines tomorrow after recording greater-than-expected results in negative inventory territory throughout July.

Technical Outlook

Crude Oil Outlook: USOIL – 3 Day Timeframe – Log Scale

Source: Tradingview

Breaking below the 5-wave triangle, oil entered a bearish territory and retested the 2024 starting point. Given the higher-than-expected ISM Services PMI along with escalating tensions in the Middle East, upward trends can be seen on the oil charts back towards levels 76.30, 77.80, and 79.40, provided it closes back in the triangle above 75.

Continuing through the bearish track and closing below 69, the next projected levels for oil can align with levels 65.60 and 60.60, respectively.

 

--- Written by Razan Hilal, CMT

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024