Crude oil prices are on a wild ride. Oil prices rallied as hot rhetoric between the United States and Iran heated up. They sold off on data from Genscape that showed an 83,106 barrel increase in supply in Cushing, Okla., since Tuesday, and after reports of the return of some Libyan oil. Reports show that Waha oil production in Libya rose to 130,000 barrels a day from 100,000 barrels a day last week, as loading resumed at Es Sider port, according to Bloomberg.
The week of July 23 will likely continue the “low-reversals-consolidations” theme of the prior week (July 16-20). The swing low of gold is in/here, in my opinion (see chart grid below). Do not initiate gold short side positions. Soybeans with a bearish daily & bullish weekly chart and Bitcoin with a 3-Day & Daily Chart sell signal may be the exceptions. Anyone ready to try and catch a falling safe or learn how? Now, it’s a savage sober rave party! This is some serious technical analysis regarding how to identify reversals and invert charts (as in upside down).
Equity markets around much of the globe are slightly soft to stable to start the week. The Nikkei is down 1.3% on speculation that the Bank of Japan could tighten up the timeframe in unwinding its ultra-loose monetary policy at their meeting next week. A stronger Yen has helped play into the weaker dollar and while the Dollar remains a critical theme, none might be bigger this week than earnings.
The rhetoric is running high as President Donald Trump continues his hard line on Iran. It seems that Iran’s President Hassan Rouhani took exception to that fact that the Trump Administration wants to reduce Iran’s oil exports to zero. Rouhani said that “America should know that peace with Iran is the mother of all peace, and war with Iran is the mother of all wars. You are not in a position to incite the Iranian nation against Iran’s security and interests.”
Volatility picked up last night after the People’s Bank of China cut a key interest rate and sent the Yuan to the weakest level against the Dollar since June 27, 2017. Equity markets and commodities took a swift hit but battled back in the overnight hours. The S&P traded right into key support at 2789.75-2792 with a low of 2793.50 before recovering to 2806; what a beautifully technical move, we will discuss more in that section below.
It appears that Saudi Arabia is saying "enough is enough" when it comes to the correction in crude oil and wants to set the record straight, just one day after an unscheduled Joint Ministerial Monitoring Committee with all the OPEC and Non-OPEC conspirators, Saudi Arabia wanted the market to know that they were not flooding the market with oil.
Every market participant knew this day was coming; trade tensions return to the forefront. While acquisitions relevant to U.S. and China trade negotiations stemming from Larry Kudlow’s interview escalated overnight, the White House Chief Economic Advisor, the true burden is a weakening Chinese yuan and the EU preparing a list of countermeasures to U.S. tariffs on European autos.
If you want 11 million reasons to be optimistic about America, you might want to start with counting barrels of crude oil. The Energy Information Administration (EIA) reported that U.S. crude oil production exceeded 11 million barrels a day for the first time in history. Not too many years ago, that would have seemed to have been impossible by many who lacked the imagination and drive of those in the U.S. energy industry.