Fundamental and Technical Analysis
US retail sales expected to be released today at 8.30pm (Singapore Time): As the Federal Reserve is waiting for more optimistic data from the US economy in order to hike rates, US retail sales would likely be one of the indicators. Therefore, we eye the US data as this would affect the USD strength. The USD has weakened quite a fair bit which has given some support to energy prices. Therefore, if US retail sales turn out well, we could be seeing some strengthening to the USD which could affect oil prices.
Oil prices fails to ignite after the strong rally late last week; Bullish momentum dissipates: Longer term momentum indicators likely shows oil prices on the verge of breaking into bullish territory late last week. Both WTI and Brent failed to break the resistance set by the SMA200, despite the recent price rally. This is brings prices back into previous range bound movements. Using other technical indicators like the Ichimoku Kinko Hyo, this show the same signals as prices fail to break past the Kumo cloud which is one of the indicators to show a bullish momentum.
Prices dropped again yesterday, bringing prices back into the range of $44.62 and $48.03 for WTI Dec’15 and $47.86 and $51.11 for Brent Dec’15. The drops from the past 2 days has reverted any bullish momentum that was forming last week and through the technical indicators that we apply, prices are moving further away from bullish territory. Thus, would mean that prices should not be moving higher up. For today, movements should take the hint from the USD which will be affected by US retail sales. If the USD moves upwards, we may see oil prices move lower to test supports of $44.62 and $47.86 for WTI and Brent Dec’15. On a side note, EIA US crude inventories will be released tomorrow instead.
Spreads are narrowing a great deal, likely reflecting the impending oversupply coming from Iranian crude oil. Iranian oil would likely be impacting Brent more and thus, pushing Brent prices down further compared to WTI. This would be reflected in spreads and the market should be pricing this in. However, with spreads narrowing to -$2.54, we do not see much more narrowing to happen. At most, we could see this range narrow to -$2.
Prices follow the same movements as crude oil and consolidates after a few strong trading days. Prices maintain their support at $2.709 and would likely stay here in wait of US natural gas inventory data. Again, if inventories show robustness, prices may retreat nearer towards $2.67. This would not be surprising as the US is experiencing a warmer fall. Depending on how the forecast for the US winter turn out, we may see prices either rally or remain low. However, for now, we believe that prices would lie in wait for inventory data before moving again. (Read Report)
Source : Phillip Futures Pte Ltd