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Sharp Recovery In Crude Snaps Seven Day Losing Streak

COMMODITIES
  • With lingering concerns over the Covid situation in the US and the potential impact on the economic recovery, markets appear more apprehensive of any kind of clear taper announcement at the upcoming Jackson Hole symposium. As such, risk trades on the front foot to start the week with a weaker dollar and a strong rally in the commodity space.
  • Oil prices, in particular have recovered a large portion of last week's selloff. As of writing, both Brent and WTI crude futures have risen around 5.5%, erasing a large portion of the near 9% retreat last week with the weaker greenback supporting the general commodity landscape.
  • Analysts have also noted oversold conditions with Commerzbank analysts noting the price weakness as excessive and believe it has more to do with the psychology of market participants than with any deterioration of fundamental data". Goldman Sachs also commented in a note that they believe the steadily "tightening commodity fundamentals — will trump the macro trends as we move toward autumn, pushing many markets like oil and base metals to new highs for this cycle". (CNBC)
  • Separately, the U.S. Energy Department announced (https://www.energy.gov/fe/articles/doe-announces-notice-sale-crude-oil-strategic-petroleum-reserve-2) that it intends to sell up to 20 million barrels of crude oil from the nation's Strategic Petroleum Reserve.
  • Gold spiked back above the psychological $1,800 level on Monday as market participants flocked to bullion amid the weaker greenback. With markets assessing the risk for the week is that Jerome Powell may be unable to give a clear timeline for stimulus withdrawals, precious metals remain underpinned.
  • Today's breach of the 50-day EMA that intersected at $1796.50 has strengthened a bullish case and may open key resistance at $1834.1, Jul 15 high.
Energy BulletsCommodities
Energy BulletsCommodities

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