Oil prices fell on Tuesday, but managed to recover closer to the end of the afternoon session. The quotes were pressured by the comments of officials, which led to an increase in doubts about the continuation of the OPEC+ policy aimed at limiting oil production in 2020. In addition, API Weekly Crude Oil Stock report for the week as of October 25 again reflected growth in stocks by 0.592 million barrels after growth by 4.45 million barrels for the previous period. Today, investors are awaiting the publication of an official report on oil reserves from the US Department of Energy.
This week, WTI crude oil decreased and is now near 55.40. Investors fear the delay or failure of signing a limited US-China trade agreement. Yesterday, representatives of the US administration said that the parties continue to work on the agreement, but may not have time to draw it up before the APEC summit in Chile. Today, Reuters reported that Beijing is hesitant to commit to purchasing a large amount of US agricultural products, which is one of the main points of the deal. Under these conditions, the market ignored the reduction of US oil reserves by 708K barrels according to API. In the evening, the EIA report will be published. Stocks are expected to grow by 0.494 million barrels. The realization of the forecast can put pressure on prices. Also, the Fed meeting may have an impact on quotes. The easing of monetary policy is likely to contribute to higher prices.
Oil Prices Support and Resistance
Technically, the price tends to 54.68 (Murrey [3/8]), breaking through which, it will be able to drop to 53.12 (Murrey [2/8]) and 51.56 (Murrey [1/8]). The level of 56.25 in the center of the Murrey trade range is the key for the “bulls”. Its breakout will give the prospect of growth to 57.81 (Murrey [5/8]) and 59.37 (Murrey [6/8]).
Technical indicators don’t provide a clear signal: Bollinger Bands are directed upwards, Stochastic left the overbought zone, and MACD histogram is at the zero line, its volumes are insignificant.
Resistance levels: 56.25, 57.81, 59.37.
Support levels: 54.68, 53.12, 51.56.
EUR showed an increase against USD on Tuesday, continuing the development of a “bullish” impetus formed the day before. Moderate support for the euro is provided by the newly improved prospect of a trade agreement between the United States and China. Earlier this week, Donald Trump confirmed his intention to discuss all the final details of the agreement with Chinese President Xi Jinping at the APEC summit in November. In addition, it became known that the US is preparing an expanded list of Chinese goods that will be exempted from high import duties. Today, the pair is trading in both directions, waiting for the appearance of new drivers at the market. Investors are focused on the Fed meeting on the interest rate followed by a press conference. The US regulator is expected to reduce rates from 2% to 1.75%.
GBP showed multi-directional dynamics of trading against USD on Tuesday, ending the session with almost zero result. The development of negative dynamics in the instrument was facilitated by the fact that the British parliament expectedly rejected the idea of Boris Johnson to hold early elections in December. However, today the Prime Minister will try to push his initiative again. Another negative factor was uncertain macroeconomic statistics from the UK. BoE Consumer Credit in September fell more than predicted from 0.969B to 0.828B pounds, while analysts expected a decrease to 0.9B. Net Lending to Individuals for the same period fell from 4.8B to 4.6B pounds.
AUD rose significantly against USD on Tuesday, updating local highs of October 22. The “bullish” trend strengthened due to the optimistic comments by officials regarding the process of working out a trade agreement between the United States and China. In addition, USD is under pressure from the upcoming US Fed meeting, at which, as expected, the rate will be reduced by 0.25%. Today, the pair is trading in both directions due to the uncertain statistics from Australia. HIA New Home Sales in Australia in September slowed down from +7.3% MoM to +5.7% MoM, which turned out to be worse than the average forecasts. Australia’s Consumer Price Index in Q3 2019 expectedly slowed down its growth from +0.6% QoQ to +0.5% QoQ. Trimmed Mean CPI for the same period remained at the previous level of +0.4% QoQ.
USD showed a slight decline against JPY on Tuesday, after updating local highs of August 1. Investors do not rush to buy USD, waiting for the upcoming Fed meeting, at which, most likely, the key interest rate will be reduced by 0.25%. On the other hand, investor interest in risk is supported by optimistic signals from US and PRC officials regarding a trade deal. Today, the pair is trading in both directions. The Japanese currency is supported by good data from Japan on the dynamics of retail sales. In monthly terms, sales in September accelerated from +4.6% MoM to +7.1% MoM. In annual terms, the growth was even more significant: from +1.8% YoY to +9.1% YoY.