Oil prices are showing signs of life following a larger drawdown in US Inventories than forecast. Crude stocks were down by 4.7m barrels, larger than the 2.4m expected. Oil, in general, is also benefitting from the switch by European utilities to heating oil from natural gas to contain costs. The market is also been buoyed by a study out of South Africa that suggested a lower risk of serious illness and hospitalisation with omicron as compared to the delta variant.
The chart below on the left is the daily timeframe of USOil. It is attempting to move into the bullish area, between the upper blue and red bands. If the stochastic can maintain a reading at 80 or above (blue rectangle), daily momentum will be positive and building. The chart on the right is the hourly time frame. The EMAs are looking to cross upwards (aqua ellipse). If this happens and is confirmed by a bullish stochastic cross, it will be regarded as a bullish development. If the stochastic pushes into its upper quintile and holds (blue arrow), short-term momentum will be favouring a potential upswing.
Past Performance: Past Performance is not an indicator of future results.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.