Oil prices are a tough call this week. The market received positive news on Friday through better-than-expected jobs data, but prices fell to five-day lows in WTI because the dollar advanced and stocks dropped. We had looked for the oil market to advance in the near-term based on better claims and ADP employment data,
Today’s trade will focus on the employment report for guidance on the “risk-on, risk-off” trade, and will also keep an eye on the presidential election next Tuesday.
Energy Price Outlook The oil market is expected to eventually make a move above the top end of the past week’s consolidation pattern in a more decisive manner than yesterday’s intraday “breakout.” We think that fund selling which has been prevalent in the last few weeks could diminish as many hedge funds closed their books throughout late-Oct. Support may also come from the restart of Northeast refineries, technical factors,
The oil market appears to be locked in a sideways continuation pattern, however, the timing of a potential breakout may still hinge upon the trading floors opening for normal operations. The CME said late yesterday that Nymex floor trading would resume only when the city lifts its evacuation order for Zone A.
Today’s session will likely be muted again by the closure of trading pits in New York, but we expect moderate pressure to remain in place. The market may be setting up for weakness through tomorrow, when many hedge funds are expected to close their books for the year.
This week’s trade in the oil market may witness bottoming action take place, as the U.S. election begins to move to center stage. There may also be an exit from the markets by hedge funds that close their books on Oct 31st, but the impact they actually exert may be somewhat limited in the near-term as their long positioning has already been reduced.
The oil market may continue its short-term correction in the near-term, but it’s also entering a support range between
$81.00 and $85.00/bbl. We think that the rate of decline will slow in the near-term, as some of the impulsive selling and weak longs exited the market during Monday’s session.
Breaking News – Crude Oil Inventories
Welcome to Monday’s Morning Coffee Break – U.S. futures are suggesting a positive open this morning after Friday’s sharpest one day drop in nearly four months. Market participants will be starting the week off with no economic data releases putting the focus on earnings and U.S. politics. Headlines in the Euro Zone will have a stronger impact on U.S. markets as well.
Welcome to Friday’s Morning Coffee Break – As we begin the final trading session in the week and finish off the first two full weeks of October U.S. stock indexes are on pace for the largest weekly drop in four months. October historically is a down month as markets prepare for the final two months of the year and it appears Mr. Market wants to stay with tradition as the
You must be logged in to post a comment.