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Crude Prices Recover amid Deeper Cut by OPEC

  • DAR Wong
  • 17 February 2020

MARKET OBSERVATIONS – 17 Feb 2020

 

Crude Prices Recover amid Deeper Cut by OPEC

Fundamental Outlook   The coronavirus continues to spread and instils fear across the region. IMF chief Kristalina Georgieva says it will be crucial over next 2 weeks to check if the epidemic spreads into weaker health country like Africa and aggravate the situation.

China’s consumer prices rose 5.4 percent in January form a year ago and better than forecast. However, economists expect the data for coming months will fall due to the sharp recession from coronavirus attack. As of Saturday morning, official statistic reports the total death toll at 1524 among 66,576 confirmed cases.

In the annual Munich Security Conference opened on Friday, German President Frank-Walter Steinmeier slammed the “America First” policy promoted by President Trump. Seated in the audience included Secretary of State Mike Pompeo, Secretary of Defense Mark Esper, Speaker of the House Nancy Pelosi, Sen. Lindsey Graham and Rep. Adam Schiff.

British GDP for final quarter of 2019 was at par and matched forecast. Manufacturing production rose 0.3 percent in December on monthly basis and below forecast. Economists are wary of further slide in coming months as the Government shows no sign yet to finalise trade deal with European Union council.

WTI Crude prices manage to recover to above USD50 /barrel benchmark and closed above USD52 /barrel on Friday. Short-covering is seen as traders expect the demand might spur due to deeper cut in coming months supported by OPEC.  

 

Technical Forecast   USD/JPY traded in narrow range last week as the market topped off 110.00 level. This week, we reckon the trend will fall but contain within 108.50 – 110.00 region. Over next few weeks, the trend is prone is slide further so long as the trend fails to protrude above 110.00 resistance.

 

EUR/USD has broken below 1.0900 support last week due to rising Dollar Index. This week, we foresee the euro might slide further to test 1.0750 level before bargain-hunting emerges. Resistance will build up at 1.0900 area in case of price recovery.

 

GBP/USD bounced off 1.2900 support last week as a counter-balance to weakening Euro. This week, the trend will be resisted at R1 – 1.3050 and R2 – 1.3200 in case of rising further. Overall range is well contained from 1.2900 – 1.3200 region while most traders will observe to capture a short entry after mid-week.

 

Gold prices are largely contained from USD1550 – USD1600 /oz as predicted last week. The trend traded near to the top side of the aforementioned range and might protrude higher in coming week. Technically, there is an immediate support at USD1565 /oz and breaking above USD1600 /oz will likely test USD1625 /oz as our next target. Observe the corrective drawdown in Dollar Index (USDX) that will push the commodity prices into recovery.

 

WTI Crude prices have made double-dip beneath USD50 /barrel on day-chart and bounced up. This week, we project the trend will rise higher but limit to USD55 /barrel as our next resistance. Overall range will be expected to contain from USD51 – USD55 /barrel amid short-covering and Dollar drawdown.

 

Silver prices are narrowing into the end of triangle formation on day-chart and likely to break up soon. Support is identified at USD17.50 /oz and topside resistance will emerge at USD18.20 /oz area. Fundamentally, we will be monitoring the Dollar Index (USDX) closely in case our predicted weakening in greenback will start pushing up precious metals. Piercing above USD18.20 /oz level will aim for USD19.00 /oz as our next target.

 

Crude Palm Oil (FCPO) Futures on Bursa Derivatives slides in prices as demand fall amid coronavirus outbreak. Trend is near to RM2600 /MT support while USD/MYR remains weak at 4.14 region. April20 Futures contract settled at RM2659 /MT on Friday. This week, we predict the trend will recover and rise to RM2800 /MT level. Open-interest is beginning to build up in-line with a reversal uptrend.  

 

DAR Wong has 30 years of trading and hedging experiences in global financial markets. The opinion is solely at his own.  He can be reached at dar@pwforex.com


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.