Crude oil outlook: WTI to start Q3 with some bullish momentum

Our crude oil outlook is bullish heading into a new quarter.

After last month’s 10% decline, both crude oil contracts are set to end June with modest gains. By Friday afternoon, they were up around 4% on the month, after recovering along with other risk assets in the second half of the week. It looks like investor concerns about demand have been reduced, despite the prospects of even higher interest rates in the US, UK and Eurozone.

Supporting crude oil at these levels is no doubt due largely to the OPEC+ deal and voluntary cuts made by several members to support the market, including Saudi. The cuts mean supply could tighten significantly if members comply.

Meanwhile, we have also seen sharp falls in US crude oil stocks while in China, the refinery throughput jumped more than 15% in May YoY, its second-highest level on record. With China also cutting interest rates again, this has alleviated concerns about demand from the top oil importer in the world.

Crude oil outlook: Technical analysis

WTI crude oil is trying to form a base and move north of the $70 level, having successfully defended the $65 long-term support zone. As the weekly chart shows, WTI has been finding support on the dips to $67.00 in the last several weeks, as oil prices traded inside a narrow range. But the inability of the bears to push oil lower means we may have already seen the low on oil prices. A potential rally above the resistance trend of the long-term bear channel would confirm the reversal. Short-term resistance is seen around $72.00. Break that and $75.00 and then $80.00 will be the next logical targets for the bulls to aim for.

In short, the crude oil outlook remains positive after much of the selling pressure was absorbed successfully in June.

Source: TradingView.com

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

How to trade with City Index

You can trade with City Index by following these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.