By ForexTime
US stock futures have perked up this morning on news that China will cut its quarantine time on foreign travellers. This comes as Wall Street pared gains after initially rising from stronger-than-expected US durable goods data.
Meanwhile, there’s more action in the oil markets as crude extends its recent gains on supply disruptions.
The blue-chip benchmark S&P500 ended Monday 0.3% lower, after a turbulent day of trading in which the index slowly gave up earlier gains. The broad-based index remains around 18% lower for the year.
Technically, the S&P500 had been trading at the bottom of a bear channel after the highs at the end of March.
Prices were also oversold on the daily and weekly charts with the RSIs dipping towards 30. The rebound has taken us above the May low at 3811.1 and the bulls are now challenging trendline resistance from the October 2021 low.
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Above here is the key psychological level at 4,000 with the 50-day simple moving average at 4028.4.
Crude bounces off trendline support
Oil prices had their worst week since early April, with Brent falling more than 7% over the last week.
Concern over the macro outlook has weighed heavily despite fundamentals remaining constructive. G-7 nations are meeting at the moment, and discussions around a potential price limit on Russian oil appear to be on the agenda. It is suggested that any limits would be done through insurance and shipping.
However, it would likely take some time to come to an agreement and would require the EU to renegotiate its last round of sanctions which some member countries may be reluctant to do, given how long it originally took EU countries to finalise its Russian oil ban.
OPEC members are set to meet tomorrow with an OPEC+ ministerial meeting on Thursday.
The cartel already agreed at its previous meeting on larger supply increases for July and August so confirmation of that supply increase for August is expected.
After falling sharply from the high at the start of the month at $123.27, Brent found support last week at the upward trendline touching the March, April and May lows. The 100-day simple moving average has also helped hold up prices and currently sits at $107.76.
We are now trading just above the 50-day simple moving average at $111.64 with bulls eyeing up the $114 resistance level which had capped Brent prices for much of April-May.
Article by ForexTime
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