Oil Slide Weighs on Energy Stocks

September 1, 2016

WTI Crude Spot

The weekly US Crude Oil Inventories figure released yesterday was 2.276 million barrels, less than the previous figure of 2.501, yet surpassing the expectations of 0.921.

After the figure was released, the bearish momentum has strengthened. WTI broke the support lines at 46.40, 46.00, and the 38.2% Fibonacci retracement level at 45.67 respectively. It is currently testing the next significant support line at 45.00, if it is confirmed broken, the next target level is at 44.50, followed by 44.00.

The resistance level is at 45.67, followed by 46.00 and 46.40.
The 4 hourly and daily Stochastic Oscillator (KD indicator) are both around 20, be award of a rebound.

Oil price has turned bearish since 22nd August as the market has lower the expectations on the freeze talk in September. In addition, the output from Saudi Arabia and Russia has reached to a record high in this summer. Iran is also increasing its production aiming to reach the pre-sanction level of 4 million barrels per day.

Brent Crude Spot

After the US Crude Oil Inventories figure was released yesterday, Brent Crude broke the support line at 48.00 and the 38.2% Fibonacci retracement level at 47.67. This morning the bearish momentum continued and broke the next support line at 47.00.

The next support line is at 46.50, followed by 46.00 and 45.35.
The newly formed resistance level is ta 47.00, followed by 47.67 and 48.00
The 4 hourly and daily time frame Stochastic Oscillator (KD indicator) are both below 20, be aware of a rebound.

S & P 500 Index

The S & P 500 index retraced yesterday as the energy sector slipped on a drop in oil prices after the weekly US Crude Oil Inventories figure released. In addition, the materials sector also weakened. The index tested the downside significant support line at 2160 and held, where the uptrend line converges.

This morning the index rebounded, and currently testing the level at 2175. If it is confirmed broken, the next target level is at 2170.

The support line is at 2170, followed by 2160 and 2150.
The resistance level is at 2180, followed by 2186 and 2193.

AUS 200 Index Spot

Yesterday AUS 200 plummeted to a seven-week low of 5386.26 as the recent rally of the dollar and drop in oil prices hit the basic materials and the energy sectors.
The index broke the major support of 23.6% Fibonacci retracement level at 5478 yesterday, and further tested the next support level of 38.2% Fibonacci retracement level at 5393 and held. This morning the index rebounded and currently oscillating in the range.

The daily time frame of Stochastic Oscillator (KD indicator) is below 20, suggesting a rebound.

The support line is at 5393, followed by 5350 and 5323.
The resistance level is at 5478, followed by 5500 and 5550.

The Dollar Index (DXY)

The US ADP Employment Change for August released yesterday was 177k, although lower than the previous figure of 194k, yet in line with the expectations. The dollar index rallied after the figure was released as the market’s confidence on the Non-Farm payroll figure to be released on this Friday was lifted.

This morning the index tested the resistance level at 96.23 again. It is oscillating in the range between 96.00 and 96.23.

Keep an eye on the US ISM Manufacturing PMI and ISM Prices Paid figures for August, to be released at 14:00 GMT today.
With better-than-expected readings, DXY will likely rally and test the upside resistance level at 96.23 again. The next resistance level is the 61.8% Fibonacci retracement level at 96.50, followed by 96.70.
While lower-than-expected figures, DXY will likely pullback and test the downside support line at 96.00. The next support level is at 95.80, followed by 95.60 and 95.40.

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