Crude Oil, EIA, API, Fed, Nonfarm Payrolls, AUD, CAD, NZD, Gold – Talking Points
- Crude oil It was supported by shrinking inventories and strong US data
- The market has re-evaluated how hawkish the Fed is
- If US Nonfarm Payrolls Beat Estimates, Will WTI Crude Oil Rise?
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Crude Oil rose against the latest range high in Friday’s session as strong US data raised expectations for economic activity in the world’s largest economy.
Crude oil inventories reported by the US Energy Information Agency (IEA) revealed a decrease of 1.508 million barrels for the week ending June 30 against an expected 983 thousand barrels and 9.603 barrels lower in the previous week.
Earlier in the week, the American Petroleum Institute (API) inventory report showed a decline of 4.382 million barrels for the same week. Shrinking reserves may indicate that the US economy will continue to thrive in the face of Fed tightening.
Compounding this outlook was the ADP National Employment Report which showed the addition of 497K private non-farm payrolls in June, well above the estimate of 228K.
Later today, the market will focus on the Non-Farm Payroll numbers released by the US Bureau of Labor Statistics. A Bloomberg survey of economists estimates that 230,000 jobs were added last month.
All of this positive news saw Treasury yields rise again with the benchmark 10-year note trading back above 4%.
Activity in the labor market has raised the possibility of a more hawkish Fed at their July 26 meeting. Wall Street ended lower in the cash session, and Asia-Pacific stock indices followed the lead with a sea of red across the region.
Growth correlated currencies such as the Australian dollar, Canadian dollar and New Zealand dollar are struggling heading into the weekend. Spot gold is also eyeing a 4-month low, trading near $1,910 at press time.
After the US non-farm payrolls data, European Central Bank President Christine Lagarde will speak.
The full economic calendar can be viewed here.
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Technical analysis of WTI Crude Oil
WTI continues to see range trading conditions with the price contained in the 66.80-75.06 range for more than 2 months. On a broader scale, it has been trading between 63.64 and 83.53 since last November.
With this in mind, the previous highs and lows may provide resistance and support, respectively.
On the downside, support might lie at 67.03, 66.82, 66.80, 64.36 and 63.64 or at the November 2021 low of 62.43.
On the upside, resistance could be at 72.72, 73.28, 75.06, 76.92 and 79.18 before a group of breakouts and previous tops in the 82.50-83.50 area.
– By Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @employee on Twitter