Chart of the Day: WTI crude (XTIUSD)
WTI crude has rallied 18% from the 5 June low of $50.69. There’s little doubt that’s helped support equities and lifting US inflation expectations, which investors measure through inflation swaps. The question is whether oil can push through US$60 and continue this bullish trend — or, with the G20 risk event looming large, is this a better level to fade.
Consider we saw a 2.7% rally overnight, predominantly driven by a 12.7mil barrel draw in the weekly oil inventory report, which, for the statisticians, was over a two-standard-deviation move relative to the five-year average. But sellers have come out in force, fading the move into US$60, although on the daily or four-hour chart there’s little conviction at this stage to enter short positions.
As we can see, the price has met the double-bottom target, which marries with horizontal resistance. So, we can see this was a clear point of conjecture for those wanting to take some exposure off the table. Stochastic momentum is fading, too, and this should only accelerate if we see a break of the five-day EMA. One to watch with the G20 and OPEC meetings ahead of us: With oil so crucial for global markets, where oil goes from here could be highly influential. That’s certainly the case in the CAD, with the USDCAD (four-hour chart) breaking down.
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