Morning Futures Roundup

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Crude Concerned with Slow Growth in China, West


   Fundamentals

Crude Oil futures have had a rocky ride since equity prices tumbled, but they have bounced back over 10 dollars from the lows. Many traders are now left with the question of whether or not Oil is poised to make a recovery to pre-correction levels. The fundamental landscape for energies has changed after the S&P downgrade, as some traders have begun to rethink growth forecasts for not only the US, but also other large global players.

The Chinese Conference Board has indicated that growth has slowed significantly, but they hedged that statement by stating that the Chinese economy is set for a soft landing. This gives the market something to ponder. On one hand, market observers will likely have to revise down projected Crude Oil demand from China if growth slows. On the other hand, the People's Bank of China could be far less aggressive with tightening policy than many had projected. If China does indeed slow along with Europe and the US, the upside potential of the Crude Oil market could be significantly limited.



   Technical Notes

Turning to the chart, we see the September Crude Oil contract forming a bullish hammer Tuesday of last week and reversing. The next levels of resistance for the Oil market come in at 90.00 and, more significantly, at 92.00. Failure to cross through these levels suggests that prices could be setting-up for range-bound trading, or possibly for a retest of near-term lows. The RSI indicator has bounced back from oversold levels and is now in neutral territory. It is also interesting to note that the momentum indicator has not bounced back from its lows to the same degree as price and RSI.


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