Oct 10, 2022
VOT Research Desk

Key News – Insights and Analysis

The Market Perspective:

On Brent crude oil, long bets rise.

OPEC+ supply cutbacks continue to be the focus of market participants.

Economic schedule is sparse, but speakers from the Fed will be highlighted.

The fundamental background of Brent crude oil

Despite a beat on the U.S. Non-Farm Payroll (NFP) figure, which saw a soaring USD, Brent crude oil maintained its gains from last week. The picture below shows how market positioning reflects the fact that the decision by OPEC+ to reduce production output significantly outweighs the current strength of the dollar. Since the last reading, long positions in Brent crude oil have grown by over 24000 lots, and they are anticipated to grow much more following the OPEC+ meeting.

In the past, October has been a net positive month for Brent prices, and it appears that this pattern will continue this month, with prices already up almost 12%. Although the atmosphere right now favors high crude prices, the deteriorating ties between OPEC+ and the U.S. are something to watch out for.

Additionally, a worldwide recession brought on by out-of-control inflation and hawkish central banks may limit the upside potential of the pound, and the short-term outlook for dollar strength does not appear promising. Fed officials are slated to speak later this afternoon, according to the economic calendar (see economic calendar below). It is unlikely that the aggressive narrative will alter, leaving the dollar open to more gains. The spotlight will shift to U.S. inflation data later this week as investors seek clarification following better than anticipated job market statistics.

Analytics

Daily price action for Brent crude confirms the 95.20 swing high from September 14th as short-term support, with prices circling the 100-day EMA The psychological resistance level of $100.00 may serve as a launching pad for bulls, and an overbought reading on the Relative Strength Index may also occur at this time (RSI).

Crude Oil WTI Futures