Two trades to watch: WTI oil, Dax
Fiona Cincotta September 1, 2021 3:38 PM
WTI oil rises ahead of OPEC+meeting. Dax rallies after record highs on Wall Street and despite plunging German retail sales.
WTI oil looks to OPEC+ meeting
US crude oil is advancing on Wednesday, paring losses from the previous session as investors look ahead to the latest OPEC+ meeting.
Oil is starting September on the front foot after booking losses in August – the first monthly loss since March as Delta covid spread and lockdown restrictions were re-imposed in some countries boosting concerns over the demand outlook.
Attention now turns to the OPEC+ meeting today where the group will decide whether to go ahead with increasing supply. The group had previously agreed to increase production by 400,000 barrels per day from August through to December as they expect the oil market to remain in deficit through to the end of the year.
However, with recent Chinese data reflecting the recent lock downs and the EU suspending non-essential travel from the OPEC+ output increase is not a done deal. The OPEC+ group may still reconsider in light of rising delta cases. A decision could be announced today or tomorrow.
API data was encouraging showing that inventories declined by 4 million barrels. EIA data is due later today.
Where next for WTI oil prices?
WTI crude oil rebounded off August lows of 6180 to retake the multi-month ascending trendline support. The bullish MACD combined with a retake of the 100 sma on the daily chart around 6850 is giving buyers hope of further gains towards 7000 the key psychological level and 7030 the 50 sma.
On the flipside, failure to retake 70.00 could see the price fall back towards the August low.
Dax rises despite disastrous German retail sales & weak Chinese manufacturing data
German retail sales plunged in July falling by a more than expected -5.1% MoM. This comes following a 4.2% rise in June. Analysts had expected a decline of -0.9%.
The larger than forecast decline suggests that the consumer driven recovery in Europe’s largest economy could be losing steam heading into the third quarter.
The Caixin manufacturing PMI fell below 50 to 49.2 after lockdown measures following the latest covid measures to stop the latest wave.
The mood in the market is still upbeat following record highs on Wall Street and thanks to comments from ECB members over the strength of the economic recovery.
Where next for the Dax?
The Dax is surging higher in early trade pushing through the 50 & 100 sma on the four-hour chart. The RSI is in bullish territory supporting further gains whilst it remains out of overbought territory. Buyers will target 16000 and 16030 for fresh all time highs.
Strong support can be seen around 15800 the 50 & 100 sma. A move below 15765 yesterday’s low could see the sellers target 15630
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