Crude Oil Flies High with Markets Eyeing a Fed Pause. Will WTI Go Higher?

Crude Oil, WTI, Bent, US Dollar, NFP, FOMC, HSI, RBA, BoC, ASEAN, G-20 – Talking Points

• Crude oil’s leap to new highs appears intact for now with
• A combination of production cuts and an inventory rundown boosted oil
• After today’s US holiday, a busy week lies ahead. Will WTI keep climbing?

The crude oil price is holding onto loft levels going into a new week of trading after making fresh highs on Friday with markets mostly seeing a good US jobs report.

The WTI futures contract made a 10-month peak at US$ 86.09 while the Brent contract traded above US$ 89 for the first time since January.

Production cut announcements from Saudi Arabia and Russia exasperated a fragile market after US inventory data revealed a surprising run down of stocks over the week prior.

Last week, the American Petroleum Institute (API) inventory report showed -11.486 million fewer barrels, while the US Energy Information Agency (EIA) weekly petroleum status report revealed a notable drop of -10.584 million barrels.

Friday’s US non-farm payrolls (NFP) were seen as positive overall with more jobs added than anticipated but the unemployment rate saw an uptick.

This was due to a higher participation rate and some downward revisions to prior readings. At the end of the day, the Fed is now widely forecast to remain on hold at its Federal Open Market Committee (FOMC) meeting later this month.

Source; DailyFX

The US is on its Labour Day holiday today and cash Treasury markets are closed but bond futures are pointing toward a slight uptick in yields. Canada is also on a Labour Day break.

The US Dollar is little changed although generally slightly weaker on Monday, but APAC equities have seen a good day.

Of the main indices, Hong Kong’s Hang Seng Index (HSI) has led the way higher, up over 2.5% today.

Metals markets are firm again after solid gains last week. Spot gold continues to trade near US$ 1,940 an ounce.

Looking ahead for the week, the RBA and Bank of Canada will be making interest rate decisions on Tuesday and Wednesday respectively.

The ASEAN summit in Jakarta gets underway tomorrow and the G-20 will start later in the week in New Delhi.

Seven Fed speakers are due to give thoughts publicly throughout the week but closer at hand, ECB President Christine Lagarde will be talking later today.

The full economic calendar can be viewed here.

WTI CRUDE OIL TECHNICAL ANALYSIS SNAPSHOT

The WTI futures contract has eased today after making a stellar run higher last week, eclipsing the mid-August peak to trade as high as 86.09.

Resistance could be at the breakpoint of 90.39 or at the twin peaks near 93.74.

On the downside, support may lie at the breakpoints near 84.90, 83.50, 84.30 and 81.75.

Further down, there is a breakpoint, prior low and the 55-day simple moving average (SMA) in the 77.30 77.50 area which might provide a support zone.

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Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

Please contact Daniel via @DanMcCarthyFX on Twitter