Crude oil biased bearishly with the opening of the week’s trading on Monday following downbeat Chinese manufacturing data as growth cools with weak economic recovery around the globe.
Crude oil opened today’s session at $96.35 and is trading negatively from these levels reaching so far a low of $96.00 and is hovering around these levels.
Nonetheless, crude oil failed on Friday to break the support levels around $94.65 which pushed it higher to retest the broken ascending trend line that meets another main descending trend line around $97.15. However, these resistance levels might push the commodity to retest the support levels around $94.65 which if broken will push crude lower to next support levels around $93.20 per barrel.
The WTi-Crude oil lost the upside stream that took it higher on Friday reaching a little below $97.10 as Bernanke showed the Fed’s readiness to act if the economy needed by not ruling out another round of quantitative easing in the coming period.
The market rebounded on Bernanke’s comments but as we can see the rebound was limited as Bernanke didn’t give a clear confirmation for the decision to be made this September. The U.S. dollar is attempting to pick up the pace today after it declined sharply on Friday, and that is putting more downside pressure on crude oil.
The current volatility for the dollar is forcing oil to remain unsettled, but the Chinese data is playing a significant role in forcing the commodity to decline so far.
China’s manufacturing purchasing managers index fell to the lowest since March 2009, which added to signs that the slowdown in the world’s second largest economy is deepening. The HSBC Manufacturing PMI fell to 47.6, compared with a previous reading of 49.3.
Also, eased fears and concerns over oil supplies in the Gulf of Mexico are pushing the commodity downwards as well after Isaac moved away from the bay.
In general, it is hard to specify where crude is going to at the current time as many major fundamentals due this week and will control crude trading, but so far, all signs are clearing path to the downside ahead of these major events.
Investors will closely monitor the ECB’s monetary stance with wide expectations that the bank will take a step and lower the current high nations borrowing costs to fight the deepening debt crisis and avoid debt-laden countries from asking for assistance especially Italy and Spain.
Also, eyes will be locked this week for the world’s largest economy which will release its data over the struggling labor sector which is expected to show more weakness in the sector heating up the easing possibility. Noting that these data over the labor sector would be the main clue for the Fed’s to launch the aspired QE.
As a result, the market would be volatile this week as these data will trigger heavy fluctuations and unexpected moves, we prefer to be very careful and cautious before entering the market.
