Crude oil trading outlook: futures steady as traders eye economic data

WTI and Brent futures were little changed during early trade in Europe today, as investors eye upcoming data from the US and EU to gauge the direction of the dollar, and the broader economic picture. The US currency is orbiting a one-year peak, weighing on crude.

West Texas Intermediate futures for October delivery on the New York Mercantile Exchange traded at $93.61 per barrel, down 0.04%, at 7:02 GMT. Prices ranged from $93.28 to $93.70 per barrel. The US benchmark dropped ~1.7% last week.

Meanwhile, October Brent on the ICE in London, stood for a 0.10% drop at $102.19 per barrel. Daily low and high were $101.65 and $102.26 per barrel, respectively. The contracts premium to its US counterpart was $8.58 after last weeks closing margin of $8.64. The European brand closed last week down ~1%.

Last weeks reported 4.5m barrel drop for US inventories was overshadowed by an increase in gasoline supplies, signalling low consumer demand, pressuring prices down the line.

Investors now turn to economic data now, to gauge the direction of crude prices. The German Ifo Business Climate Index will be posted today and analysts project a lower-than-before but relatively upbeat reading, while later well see US new home sales figures, which are said to have made significant gains last month. Both readings can impact the US dollar, which in turn impacts crude.

The value of the dollar plays a significant role in crude pricing, as a stronger US currency lifts the relative price of any dollar-denominated trade good, such as crude oil, to other currencies.

The US dollar index, which measures the strength of the greenback, is at a 13-month peak and growing, as speculation that the US Federal Reserve will be raising the benchmark interest rate earlier than previously thought gains momentum. Further positive economic data in the US, and downbeat EU figures, will offer more energy to dollar bulls.

The geopolitical scene also clocked in sizable impacts on prices over the past few weeks, though it is losing leverage relative to economic data.

Middle East

Iraqi oil continued flowing to export terminals as the country struggles to form a new government. The country pumped some 3 million barrels of crude daily, making it OPECs second-biggest exporter, as government forces and Kurdish Peshmerga continue battling the Islamic State, supported by US airstrikes.

Fighting has been contained to Iraqs north, while the southern oilfields, which account for about 80% of Iraqi oil production, have been untouched by violence so far.

Elsewhere, Libya saw crude production rise to ~0.7 million barrels per day despite growing internal power struggles, which left devastation many dead in the capital, Tripoli, over the past several weeks.

“The region is in chaos but production continues to rise,” Robin Mills, the head of consulting at Manaar Energy Consulting and Project Management, said for Bloomberg. “Brent’s been pretty weak. Global demand is still sluggish.”

Meanwhile, the ongoing conflict in Europe also logged its diminishing share of support, though the risk premium has all but gone, as investors dont see an escalation of fighting or increasing tensions between Russia and the West affect the formers energy exports, the largest in the world.

Technical support and resistance levels

According to Binary Tribune’s daily analysis, West Texas Intermediate October futures’ central pivot point is at $93.54. In case the contract breaches the first resistance level at $94.15, it will probably continue up to test $94.66. Should the second key resistance be broken, the US benchmark will most likely attempt to advance to $95.27.

If the contract manages to breach the first key support at $93.03, it will probably continue to drop and test $92.42. With this second key support broken, movement to the downside will probably continue to $91.91.

Meanwhile, October Brent’s central pivot point is projected at $102.37. The contract will see its first resistance level at $102.75. If breached, it will probably rise and test $103.20. In case the second key resistance is broken, the European crude benchmark will probably attempt to advance to $103.58.

If Brent manages to penetrate the first key support at $101.92, it will likely continue down to test $101.54. With the second support broken, downside movement may extend to $101.09 per barrel.