Oil prices showed ambiguous dynamics on Monday, after opening with record growth of more than 10% amid a worsening situation in the Middle East. At the weekend, oil refineries in Saudi Arabia were attacked by drones, which led to a reduction in Saudi production by half. The US accused Iran of assault, saying it was ready to strike back if Saudi Arabia confirms Washington’s suspicions. In addition, Donald Trump approved the use of petroleum products from the US strategic reserve to help stabilize supply and demand in the market.
Today, investors focus on the API Crude Oil Stock report for the week as of September 13, which last time showed a decrease in reserves of 7.2M barrels. There is little hope that today’s report will be positive.
Support and resistance
Bollinger Bands in D1 chart show stable growth. The price range is actively expanding, but it fails to catch the development of “bullish” trend at the moment. MACD indicator is growing keeping a strong buy signal (located above the signal line). Stochastic shows oscillatory dynamics and currently is near its highs pointing at the overbought instrument in the ultra-short term.
Given the sharp upward opening of the instrument at the beginning of the week, current indicators remain uninformative. One should wait for clarification of the situation.
Resistance levels: 68.63, 69.31, 70.00.
Support levels: 67.38, 66.68, 66.00, 64.95.
To open long positions, one can rely on the breakout of 68.63 or 68.80. Take profit — 70.00 or 70.50. Stop loss — 67.60. Implementation time: 1-2 days.
The rebound from 68.63 as from resistance with the subsequent breakdown of 67.38 can become a signal to return to sales with target at 64.95 or 64.00. Stop loss — 68.63 or 69.00. Implementation time: 2-3 days.
Morning Stock Report
EUR showed a decline against USD on Monday, retreating from its local highs of August 27 updated at the end of last week. The pressure on the instrument was provided by weak data from China, as well as by a number of statements by representatives of the ECB that noted the low growth rates of the European economy. Retail sales in China in August showed a slowdown from 7.6% to 7.5% YoY with a forecast of +7.9% YoY. Over the same period, Industrial Production slowed down from +4.8% YoY to +4.4% YoY, which also turned out to be worse than the forecast of +5.2% YoY. During today’s Asian session, the instrument shows corrective growth, awaiting the publication of European statistics on business sentiment. However, analysts do not foresee a confident growth of the pair, therefore, only weak USD exchange rate could perhaps help the “bulls”.
GBP fell against USD at the beginning of the current trading week, reacting to several factors. Investors are still concerned about the slow pace of development around Brexit. There is not much time left until the deadline, and Boris Johnson is trying more to enlist the support of his supporters, rather than looking for ways to get the agreement approved in parliament. Johnson’s meeting with European Commission President Jean-Claude Juncker was unsuccessful. Moreover, the British Prime Minister reiterated his intention not to request a postponement of Brexit. It is likely that Johnson will try to ignore the parliament’s ban on the hard Brexit, but this threatens to exacerbate the political crisis in the UK, which will negatively affect the country’s economy if it does leave the EU at the end of October.
AUD showed ambiguous trading dynamics against USD on Monday, falling under pressure from weak macroeconomic statistics from China. In addition, investors are actively reacting to the aggravation of the situation in the Middle East and the increased threat of a US war with Iran. Last weekend, the oil refining facilities of Saudi Arabia were attacked, which caused a rapid increase in oil prices. The US was quick to blame Tehran for the attacks, and Donald Trump announced his readiness to retaliate after confirming the suspicions of Saudi Arabia. During today’s Asian session, the pair shows a downward trend. Investors are focused on statistics from Australia and published minutes of the RBA meeting of September 3, at which the rate was maintained unchanged at 1.00%. Australian Housing Price Index in Q2 2019 showed a decline of 0.7% QoQ after a decrease of 3.0% QoQ last month. Analysts had expected a decrease of 1.0% QoQ.
USD showed strong growth against JPY on Monday. However, it is worth noting that the instrument opened with a significant gap down, so by the end of the trading session USD only managed to recoup its losses at the opening. Meanwhile, JPY is supported by the aggravation of the situation in the Middle East after a series of attacks on oil refineries in Saudi Arabia. The United States accused Iran of assault and declared readiness to retaliate if Saudi Arabia confirms Tehran’s responsibility for the attack. During today’s Asian session, the pair is trading in both directions. Investors expect the situation in the Middle East to develop and are awaiting the publication of macroeconomic statistics from the USA on retail sales and industrial production in August.
Oil prices showed ambiguous dynamics on Monday, after the market opened with record growth of more than 10% amid a worsening situation in the Middle East. At the weekend, oil refineries in Saudi Arabia were attacked by drones, which led to a reduction in Saudi production by half. The United States accused Iran of assault, saying it was ready to strike back if Saudi Arabia confirms Washington’s suspicions. In addition, Donald Trump approved the use of petroleum products from the US strategic reserve to help stabilize supply and demand in the market. On Tuesday, investors focus on the American Petroleum Institute Crude Oil Stock report for the week as of September 13, which last time showed a decrease in reserves of 7.2 million barrels. There is little hope that today’s report will be positive.