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Oil Prices Edge Higher On Supply Issues

WTI’s prices have been on the rise for a third consecutive day yesterday and oil traders seem to be still bullish after a drawdown of 5.4 million barrels being reported by the American Petroleum Institute for last week, yesterday. It should be noted that a new hurricane (hurricane Nicholas) is lashing out on the shores of Texas and Louisiana and could prolong a shut-down of oil production in the area, thus tightening supply issues for the commodity’s market, despite refineries working. On the flip side, OPEC’s monthly report on Monday, showed that the oil producing block trimmed its expectations regarding oil demand for Q4, from 110k bpd to 99.7k bpd, which could weigh on oil prices, yet hurricane news seem to dominate the scene for now. As for releases we would highlight for oil traders the release of the weekly US EIA crude oil inventories figure today, which is expected to show a widened drawdown if compared to last week’s figure and if so, could provide some support for oil prices as demand surpassed oil production levels once again.WTI prices edged higher yet remained between the 69.35 (S1) and the 71.10 (R1) levels. Given that the progress made for WTI bidders seems to be slow and the commodity’s price seems to stabilize, we maintain a bias for a sideways motion, yet the RSI indicator below our 4-hour chart is above the reading of 50, implying that the Bulls may still have a slight advantage. Should the commodity’s price actually be driven by buyers, we may see it breaking the 71.10 (R1) resistance line and thus opening the way for the 74.65 (R2) resistance level. Should a selling interest be displayed by the market we may see WTI prices, dropping, breaking the 69.35 (S1) support line and aim for the 67.00 (S2) support level.

AUD continues to weaken against the USD

The Aussie retreated against the USD yesterday as prices of iron Ore continued their slide lower weighing on the AUD, given that Iron Ore is one of the major export products of the Australian economy especially to China. China’s industrial output growth rate for August slowed even more than what the market was expecting and foreshadows difficult days ahead for Australian exporters of the industrial metal. It should be noted that RBA in its latest meeting had mentioned that it expects the economic circumstances to be worse before improving and cited that employment data could weaken in the next months due to the strict lockdown measures employed in various areas of Australia. Aussie traders are expected to keep a close eye on the release of Australia’s employment data for August due out during tomorrow’s Asian session.

AUD/USD dropped yesterday breaking the 0.7335 (R1) support line, now turned to resistance. We tend to maintain a bearish outlook for the pair, as long as it remains below the downward trendline incepted since the 7th of September. Also please note that the RSI indicator below our 4-hour chart remains near the reading of 30, underscoring the presence of the bears for the pair. Should the bears maintain control over the pair’s direction, we may see it breaking the 0.7280 (S1) support line and take aim for the 0.7225 (S2) support level. Should the bulls take over, we may see AUD/USD reversing course, breaking the 0.7335 (R1) resistance line, the prementioned downward trendline and aim for the 0.7420 (R2) resistance level.

Other economic highlights today and the following Asian session:

During today’s European session, we note the release of UK’s inflation measures for August and Eurozone’s industrial production for July. In the American session we highlight Canada’s CPI rates for August, as well as the US industrial production growth rate for August and the weekly EIA crude oil inventories figure. On the monetary front BoJ Governor Kuroda, ECB Board member Schnabel and ECB’s chief strategist Philip Lane are scheduled to speak. During tomorrow’s Asian session we get New Zealand’s GDP rate for Q2, Japan’s trade data for August and Australia’s employment data for the same month.

WTI H4 Chart

Support: 69.35 (S1), 67.00 (S2), 65.00 (S3)

Resistance: 71.10 (R1), 74.65 (R2), 76.40 (R3)

AUD/USD H4 Chart

Support: 0.7280 (S1), 0.7225 (S2), 0.7170 (S3)

Resistance: 0.7335 (R1), 0.7420 (R2), 0.7480 (R3)


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