Crude oil price rises as stocks, bonds and yen suffer ahead of ECB

Crude Oil, WTI, Brent, USD/JPY, Japan, China, ECB, Lagarde – Talking Points

  • O rawit costs to find support as demand continues to grow
  • PAAC-Shares were mostly weaker as sentiment deteriorated on risky assets
  • All eyes on the ECB meeting. Will WTI Rise Fuel Inflation Fears?

Crude oil hit a 3-month high overnight as Energy Information Administration (EIA) report show U.S. Gasoline Stocks moved lower. It might showin good health fuel request entering the summer driving season.

Comments from the UAE government minister also supported black gold when he said demand from China was increasing at a time when there was little capacity available to increase production.

The WTI futures contract is above US$122 barrels and the Brent contract is approaching US$124 barrels.

APAC stocks were mostly down after a negative advance from Wall Street overnight and US futures are weak during the after-market session.

All Asian equity indices fell except for Japan’s Nikkei 225, which was slightly in the green. A weaker yen helped sentiment there, but soaring crude oil prices could come to bite it.

The general mood darkened when Shanghai closed down a district. Conversely, Chinese trade data for May was better than expected. It amounted to 78.8 billion dollars instead of the 57.7 billion dollars forecast.

USD/JPY is trading at a 20-year high after rising energy prices scared off inflation fears. The market fears that if inflation picks up again, the Fed’s rate hike path will become more aggressive again.

These concerns helped Treasury yields to rise, with the benchmark 10-year note rising above 3%. Gold is stable near US$1,855 an ounce.

Today’s focus is on the ECB meeting where the market expects no rate change. The spotlight will be on President Christine Lagarde’s post-decision press conference.

The degree of hawkishness will be scrutinized for clues on the ECB’s hiking path. EUR/USD has been in a relatively tight range so far this week ahead of the meeting

Later, the United States will see employment data.

The full economic calendar can be viewed here.

Crude Oil Technical Analysis

The bullish momentum continues to evolve for Crude Oil at the moment, as illustrated by the positive gradients throughout the period simple moving average (SMA).

Narch’s peaks at 129.44 and 130.50 could offer a resistance area. On the downside, support could be seen at a breakout point and previous low at 116.57 and 111.20 respectively.

Chart vscreated in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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