While markets should be celebrating the better than expected non-farm payroll data released on Friday, it looks like there is a bit of a hangover in the market. Uncertainty over Greece is probably to blame.
WTI crude oil declined by 2% over the past week. A very bearish inventory report on Wednesday sent the WTI price plummeting below the “head & Shoulders” neckline where it stabilized. After testing key support at $95.50 WTI bounced after the good jobs data out of the USA. Despite the good jobs data we are concerned over the weakening demand for crude and refined products from the world’s largest oil consumer.
As mentioned above, the neckline of the head & shoulders formation was breached, but the market bounced back above. Technically there is no clear trend for the near term although a bearish undertone persists where new lows are made along with lower highs. A bounce is possible back up to $100 but at that level we prefer to sell, looking for a break of $95 and possibly $93 to the downside.
We expect a range of $93-100 for the rest of the week.
When the Rand broke the R7.68/$ level last week it rapidly fell to the R7.5 level as predicted. Better than expected economic data from many countries, including the USA increased the appetite for risky assets and currencies.
R7.68 will now become resistance, while support is at R7.5. We do not expect this range to hold for long as we believe the Rand will either strengthen more to the R7.3 level or fall back to the R8 level where it has been trading since November last year. The path of least resistance will be a fall back to R8/$, but a favourable outcome in Europe can send the local currency much stronger.
We expect a range of R7.68-7.95/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download Weekly Oil Report as a PDF.
WTI crude oil is stuck in the doldrums around $100/bbl while the Rand flexed its muscles the past week. US Q4 GDP figures disappointed and this can have a significant impact on crude oil prices.
WTI crude oil declined by just under 1% over the past week. The market is stuck in neutral, waiting for decisive news out of Europe, as well as further news around the Iran situation. 4th Quarter GDP figures out of the USA came in at 2.8%, 0.2% less than economists had expected. This could be a double edged sword, but we will discuss that in more detail later in the report.
Technically the market is stuck in neutral, with no apparent trend. This sideways movement can continue for another two weeks. The bearish “head & shoulders” pattern remains in play and should the neckline be broken ($97), prices should decline quickly to $94 and even lower. If the neckline holds for another week or two, the formation would have failed and technically this will be bullish. We believe that $97 will be tested, but expect a bounce from there back to $100 and potentially up to $103.
We expect a range of $97-103 for the rest of the week.
The Euro bounced from multi-month lows against the US$ and the Rand followed enthusiastically. The Rand gained 2% over the past week. The lack of disastrous news out of Europe provided support to the Rand and Friday’s miss on the GDP figure placed the US$ under pressure.
The Rand is still above the crucial level of R7.68/$, that seems to be the bottom of the current range. A break of the level should see the Rand move down to R7.50 and possibly R7.36. To the upside R8 is turning into resistance and we do not foresee a breach of this level in the coming week.
We expect a range of R7.68-7.95/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download Weekly Oil Report as a PDF.
Equity markets have stepped up a gear and are surging ahead, while crude oil seems to be under a bit of pressure. With WTI under $100 and the Rand under R8/US$, it may present a good buying opportunity soon.
WTI crude oil declined 2.2% over the past week. After failing to close above $102 (twice), crude pulled back and broke below $100. A lack of commodity specific bullish news was responsible for the malaise, despite better than expected economic data out of the USA.
Last week we indicated that we are more bearish than bullish from a technical perspective. We continue with this view after WTI made a “double top” and failed to close above $102. WTI has now set itself up for a “head & shoulders” pattern that may complete if the neckline is broken at $97.5. Should the neckline indeed be broken, we expect the price to decline to +-$93.5 before consolidating there. Overall, we expect the decline to continue in the near-term.
We expect a range of $94-102 for the rest of the week.
The Rand gained 1% in less volatile trading than we have seen in a while. Higher precious metals prices and a steady increase in the local stock market are providing support. We expect the strengthening trend to continue in the absence of disastrous news out of Europe.
Technically, the Rand is giving mixed signals. Our proprietary signal is giving a short-term sell on the daily graph, while the break to the downside of the 100day moving average is positive. Therefore we expect range-bound trading for the week.
We expect a range of R7.8-8.15/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download Weekly Oil Report as a PDF.
We delayed the weekly report by 1 day as yesterday was a public holiday in the USA. Markets are rising today despite a slew of sovereign downgrades in Europe on Friday by S&P. It looks like the market was expecting the downgrades and is taking it in its stride. If anxiety over Europe continues to dissipate we see large upside potential in crude oil.
WTI crude oil is almost unchanged for the week. The price came under pressure towards the end of last week as European politicians moved out the date for an oil embargo on Iran by 6 months. However, the price is rebounding after successful bond auction in France despite the ratings downgrade.
Technically, we are more bearish than bullish after last week’s price action where the important swing low at $98 was taken out. This would normally call for lower prices but the current bounce above $100 is providing support. That said, we expect a move lower to $95. If however, $100 holds, the move up can extend up to resistance at $104, which we expect to hold.
We expect a range of $95-104 for the rest of the week.
The Rand gained 1.7% in volatile trading. The trend was for quick, violent weakening spurts as negative news came out or the Euro lost ground, followed by slow but steady rallies back towards R8/US$ level. It looks as if the Rand is slightly de-coupling from the Euro and gaining ground as the price of gold and other precious metals gain.
Since 20 December, the Rand has been trading range-bound between R8.0-8.2 / US$. In the short-term it looks like a break of the R8/$ level is possible. Technically, we expect R7.86 to hold to the downside but a breach of that level can see the Rand move back to R7.5/$ and even down to the 240day moving average at R7.34/$.
We expect a range of R8.1-8.5/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download Weekly Oil Report as a PDF.
2012 is slowly starting to come alive and looks likely to be yet another very interesting year for global markets. The European debt crisis drags on while recent economic data out of the USA have surprised to the upside. Regardless, we are certain that there will not be a lack of opportunities on the markets this year.
We would like to take the opportunity to wish all our clients and readers a prosperous new year and look forward to work with everyone in managing their energy risk profitably in 2012.
Since our last weekly report on 19 December 2011, WTI increased by 8.6%, lifted by a year-end rally and concerns about tensions between the USA and Iran over Iran’s nuclear program.
Technically, we are slightly bullish while the price of WTI is above $100 support. The problem with our bullish outlook is that it is based to a large extent on strength derived from the Iran tensions. We expect a bounce from current levels to $105. Support is at $100 and then $98. A close below $98 would negate our bullish view and open the way to $95 and potentially $90. However, if $105 is breached convincingly, $110 is on the cards.
We expect a range of $100-105 for the rest of the week.
The Rand gained 2.5% since 19 December 2011. We expect that in the next 3 months the currency will continue to be driven mainly by what is happening in Europe.
Technically the Rand looks set to continue its range-bound trading. The range has shifted somewhat to R8-8.5/US$.
We expect a range of R8.1-8.5/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download Weekly Oil Report as a PDF.
The long awaited European summit took place with mediocre results. Although similar debt crises will be avoided in future by the new fiscal union, the current crisis is not yet resolved by a long shot. Still, after a tough year it seems as if the bears are getting tired and markets may have a small little Christmas rally.
WTI declined by 2.4% for the week. The decline can mainly be ascribed to persistent fears that the European debt situation has not been put to bed.
On 5 December WTI formed a bearish “shooting star” formation and reached a high of $102.5, before declining and falling below $100 on 7 December. After declining below $100 WTI tried unsuccessfully to once again close above the level. We now see $100 and $101 as resistance. Although we believe $101 may be tested intra-day, we expect the decline to continue and look for support at $96.5 to be tested.
We expect a range of $95-101 for the rest of the week.
The Rand lost 1.5% as market participants lightened on risky assets in the run-up to the European announcement. All trading is headline-driven at the moment. Should the dust settle in Europe, we expect the Rand to strengthen significantly. If not, we may see a dramatic decline in thin volume towards year-end.
As mentioned last week, the Rand is setting up a nice “head & shoulders” formation. A break of the neckline at R7.8/$ (close-below) will see it strengthen significantly. A significant bounce off the R8/$ level will however indicate that the formation has failed. This will be very bearish for the Rand and as mentioned above can see the Rand weaken significantly in thin volume.
We expect a range of R7.8-8.3/US$ for the rest of the week.
View full text of the Weekly Oil Report.
Download the Weekly Oil Report as a PDF.
This week will prove crucial for world markets, including oil, as traders wait for European leaders to announce exactly how they intend to solve the debt crisis. All in all, there is a lot of optimism around. We hope that this time everyone will not be disappointed...
WTI increased by 3.1% for the week. A wave of optimism swept up WTI as economic data out of the USA surprised to the upside and a number of central banks announced a plan to provide dollar liquidity to the cash-strapped European debt system.
WTI formed a bullish “hammer” formation on 25 November and bounced from there, breaking easily above the psychologically important $100 level. Resistance is at $102.4 and $104. We believe the $102.4 level will be tested during the week. A break of the level will open the way to $104 and $105. Support is at $100. If $100 is broken on a close (unlikely in our view), $96 may be tested before the advance resumes.
We expect a range of $100-105 for the rest of the week.
The Rand gained 5% for the week after racking up massive losses in the previous four weeks. It looks like the Rand has now firmly broken back in to the R7.8-8.2/US$ range. The Rand gained as the US$ weakened after the announcement of the joint central bank plan to supply dollar liquidity, which increased risk appetite globally.
The Rand is setting up a “head & shoulders” formation, that if completed will see it strengthen by a further 50c/US$. We believe it is still early days to call such a movement and expect range trading in the R7.8-8.2/US$ for the week. However, a break of the R7.8/US$ level can see the Rand advance to R7.5 in a flash. We believe we can see at least R7.60/US$ before the end of the year.
We expect a range of R7.8-8.2/US$ for the rest of the week.
View full text of the Weekly Oil Report.
Download the Weekly Oil Report as a PDF.
During the past week WTI surged above the $100 level as we had been expecting. However, today we are a lot less bullish about oil and the world overall.
WTI declined by 1.7% during the past week. However, on Thursday WTI hit $103 before pulling back. Bullish inventory data, as well as news of a changing of direction of a pipeline between Cushing and Houston drove the price higher. The news of the pipeline also caused the spread between WTI and Brent to shrink to $10, down from a high of $27 earlier in the year. Continued debt concerns in Europe, now exacerbated by debt worries from the USA are now weighing heavily on the WTI price.
After reaching resistance at $103, WTI pulled back sharply and easily broke support at $100. We expect the correction to continue and test support at $95. A break of $95 will open the door for a test of support at $93 and $91. Should $95 be broken, key support is at $90. A break of $90 will signal that the upwards movement has stalled and WTI should decline to the mid $80s. Although we expect further declines from current levels, we are fairly confident that $90 will not be broken during this week.
We expect a range of $93-99 for the rest of the week.
The Rand weakened by 4% during the past week. Uncertainty over the European debt crisis cut back the demand for risky assets and sent the Rand reeling. The longer the crisis drags on, the larger the impact will be on the Rand. With no end in sight to the troubles in Europe, from a fundamental point of view, we expect the Rand to weaken further.
For now the Rand is still trading in a large range of R7.80-8.30/$. We’ve been trading in this range since mid September and we believe there will be a break-out before the end of the year. While it is always hard to predict the direction of the break-out, it looks like the move will be to the upside.
We expect a range of R8.0-8.3/US$ for the rest of the week.
View full text of Weekly Oil Report.
Download the Weekly Oil Report as a PDF.
It seems like Europe is sorting itself out politically and markets are loving it. Oil markets are particularly bullish. With optimism increasing, commodities across the board are picking up and inflation is rearing its ugly head.