OIL: Crude Lower As Tariffs Delayed & Global Growth Concerns Rise
Oil prices gave up most of their earlier gains to finish Monday slightly lower. They rose on the prospect of US tariffs but eased when Mexico’s were delayed a month boosting hopes that a trade war will be avoided. They have also been postponed 30 days for Canada. While tariffs are inflationary and the prospect boosted oil prices, the market is also concerned about their impact on demand. The USD index rose 0.1%.
- WTI fell 0.3% to $72.33/bbl, taking another leg down following news of the delay in implementing US tariffs on Canada. It fell to a low of $72.05 following the news on Mexico, below support at $72.26, 50-day EMA, which suggests scope for a deeper retracement. The next support level is $68.05.
- Brent is 0.4% lower at $75.40/bbl following a low of $75.04, below support at $75.47, 50-day EMA, and $75.36 opening up $71.25, December 20 low. The correction has allowed an overbought position to unwind. The bull trigger is at $81.20.
- OPEC+ left its output targets unchanged at its review on Monday, despite US President Trump urging it to increase production and thus reduce prices.
- 10% tariffs on Canadian oil imports are estimated to add 8% to heating expenses in the Northeast US (National Energy Assistance Directors Association) and 15c/gallon to fuel prices (Lipow Oil Associates) but it will vary by region. The West Coast could see gasoline prices rise 20c/gallon and if Canada exports to other countries then they could rise over 30c/gallon. Flows to the US have soared to beat the tariff deadline.
- Some Canadian refineries have already begun to increase prices. March US gasoline futures rose 1.9% on Monday but spiked 6.2% on the open.
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Historical bullets
JGB TECHS: (H5) Returns Lower
- RES 3: 149.55 - High Mar 22 (cont)
- RES 2: 147.74 - High Jan 15 and bull trigger (cont)
- RES 1: 144.48/146.53 - High Nov 11 / High Aug 6
- PRICE: 142.12 @ 15:01 GMT Jan 03
- SUP 1: 141.65 - Low Dec 30
- SUP 2: 141.56 - 1.764 proj of the Aug 6 - Sep 3 - 9 price swing
- SUP 3: 141.05 - 2.000 proj of the Aug 6 - Sep 3 - 9 price swing
Markets slipped on the hawkish Fed and are yet to fully recover, touching 141.65 on the way lower. Medium-term trend signals on the continuation chart continue to point south. A resumption of the trend would pave the way for a move towards 141.56, a Fibonacci projection point on the continuation chart. A stronger recovery would open 144.48, the Nov 11 high. Further out, key resistance is at 146.53, the Aug 6 high (cont).
USDCAD TECHS: Bull Flag Highlights A Clear Uptrend
- RES 4: 1.4669 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4392 @ 15:50 GMT Jan 3
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4307/4232 20-day EMA / Low Dec 17
- SUP 3: 1.4136 50-day EMA
- SUP 4: 1.4011 Low Dec 5
USDCAD is unchanged and bulls remain in the driver’s seat. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.4307, the 20-day EMA. A pullback would be considered corrective.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6408 50-day EMA
- RES 2: 0.6341 High Dec 18
- RES 1: 0.6247/6282 High Dec 30 / 20-day EMA
- PRICE: 0.6204 @ 15:21 GMT Jan 3
- SUP 1: 0.6179 Low Dec 31
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
A bearish trend condition in AUDUSD remains intact and the pair continues to trade closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6282, the 20-day EMA.
