Oil's Rebound Above $60 Increases Focus on Technicals
12 July 2019 - 6:12AM
Dow Jones News
By Amrith Ramkumar
A recent rebound in U.S. crude-oil prices back above the closely
watched psychological level of $60 is increasing focus on gauges of
market momentum, the latest swing in a topsy-turvy 2019 for energy
markets.
West Texas Intermediate futures, the U.S. price gauge, closed
above $60 for the first time in seven weeks Wednesday and edged
down 0.4% to $60.20 on the New York Mercantile Exchange Thursday.
Despite Thursday's decline, oil has staged a powerful rebound after
prices tumbled into a bear market of more than 20% below their
April peaks in early June. Crude is still 9.2% off its April highs
even with its recent surge.
Oil is still nearly 9% off its April highs even with its recent
surge.
But some analysts think prices staying above $60 and other
closely monitored levels could add fuel to the rally. With their
recent rally, they have climbed back above their 50- and 200-day
moving averages, trend lines observers of market momentum use to
trace an asset's recent performance. Eclipsing such lines is
typically viewed as a bullish development.
Additionally, oil has stayed between $50 and $60 for much of the
last three years, so moves out of that range tend to generate more
interest in crude. After the ratio of bullish bets to bearish bets
on oil futures by hedge funds and other speculative investors slid
through mid-June, it has climbed in three consecutive weeks through
July 2 with prices rebounding, Commodity Futures Trading Commission
data show. Figures for the week ended Tuesday will be released
Friday.
Despite fears of softening demand amid trade tensions and excess
supply, U.S. crude stockpiles have started to come down and the
Organization of the Petroleum Exporting Countries and its allies
continue to curb output.
A storm brewing near the Gulf of Mexico, a key production
region, has resulted in some supply disruptions this week, and many
analysts remain wary that an escalation in tensions between the
U.S. and Iran could further disrupt the flow of oil around the
globe.
"The rally will likely remain nervous and prone to short-term
setbacks, but we think it has further to go," Standard Chartered
analysts said in a note to clients.
Brent crude, the global oil-price gauge, fell 0.7% to $66.52 a
barrel on London's Intercontinental Exchange Thursday.
In one encouraging sign for oil bulls, OPEC cut its 2019
oil-production growth forecast for its non-cartel peers in its
monthly market report Thursday. The cartel also left its
demand-growth target unchanged in June, following downgrades to
demand estimates in recent months that sent prices tumbling.
Elsewhere in commodities Thursday, natural-gas futures slipped
1.1% to $2.416 a million British thermal units, declining after
weekly stockpile figures showed inventories rose more than expected
during the week ended July 5.
Most-active Comex gold futures fell 0.4% to $1,406.70 a troy
ounce, hurt by a pickup in bond yields that made the metal less
attractive to yield-seeking investors.
Copper inched down 0.2% to $2.6875 a pound.
Write to Amrith Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
July 11, 2019 15:57 ET (19:57 GMT)
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