According to IEA, growth estimates for 2019 and 2020 have been revised downwards. Oil demand has already dropped significantly globally with minor increase by the US, India and China. Production and supply have also dropped especially by OPEC nations due to their agreement. Many believe that OPEC leader Saudi Arabia could step in to support prices. Saudi Aramco’s plans for a successful IPO depends on the Oil market conditions. Higher Oil prices could increase the total value of the firm. This may lead Saudi Arabia to take strong measures to uplift prices. Other reports indicate some traders are adding long positions to their portfolios as they are attempting to take advantage of the current lows. Today’s OPEC Monthly Report could prove useful to traders or investors and could move oil prices.
Risk on sentiment leads to selloffs
European indexes landed in losses yesterday, as most of the major European financial data has been rather bearish and general market sentiment has been pessimistic. In the US, stock markets came under a massive selloff as geopolitical tensions and further uncertainty scares investors. Furthermore, Morgan Stanley analysts believe the Fed will be cutting rates as soon as September to protect from further economic deterioration. As Gold moved to new yearly highs yesterday, traders may be moving money from stocks to the precious metal to hedge the increased risk. All the above points confirm the financial markets are operating with a high risk and uncertainty. In our view the risk and uncertainty has managed to create an overreaction and traders could be trying to take advantage of negative environment. From a different viewpoint, some believe that most traders are not in place due to the holiday season and once the season is over markets could view more volatility.
WTI H4
Support: 54.50 (S1), 53.35 (S2), 51.50 (S3)
Resistance: 55.80 (R1), 57.50 (R2), 59.40 (R3)
XAU/USD H4
Support: 1500 (S1), 1485 (S2), 1470 (S3)
Resistance: 1530 (R1), 1550 (R2), 1570 (R3)
