Global equities edged lower on the final day of a mammoth month-long rally despite more positive vaccine news:
After a very strong rally in November, investors assessed their positions for the final month of the year. Major indices recorded their best monthly performance in a very long time.
In the US share market, major US equities closed in the red similar to its European counterparts:
In the FX space, major currencies were mixed against the US dollar. The greenback gained some upside momentum but largely due to the end-of-month positions.
On the economic front, the PMI data in the US and China stood out:
Crude oil prices remained in familiar levels ahead of any updates from the OPEC meeting. The oil market has remained pressurised by the uncertainty on the demand outlook and a supply glut. The broad optimism in the markets triggered largely by vaccine updates and hopes that the pandemic may soon be under control, has been providing support to a fundamentally battered energy market.
Crude oil prices have firmed to the upside in the last few weeks in the anticipation that the global activities might be back to a new normal with the vaccine. The commitment of the OPEC members and its non-OPEC allies is crucial for the oil market. As of writing, WTI Crude oil (Nymex) and Brent Crude (ICE) were trading at around $45.05 and $47.59 respectively.
For the chart of the day, Adam Taylor takes a look at the USOIL – Can Oil Prices Reach Pre-Covid Levels?
Goldman Sachs has recently called for the value of crude oil to increase to roughly $65 per barrel as we head into 2021, and the latest charts appear to echo this sentiment of a global rebalancing in this market. Naturally, much of these moves rely on the promise of a Covid vaccine and some seasonal cues. In today’s Chart of The Day, we use the point and figure method to help uncover potential supply and demand areas and see where price action may occur.
The chart above highlights the bullish support line currently at the forefront of oil moves. Since the low of zero, the price has incrementally risen, generating a steady accumulation period before the latest bullish breakout above $43.00. This breakout also forms part of a bullish flag formation that suggests additional moves to the upside in the coming months.
Using a point a figure calculation to locate a potential upside target, we find a vertical count from the $1.00 low provides us with $59.00 as a possible destination for the commodity. Not too far off from what analysts over at Goldman are presenting.
It appears many analysts are calling for oil to return to pre-covid prices as we expect increased demand once both a vaccine becomes readily available winter months in the northern hemisphere typically drive energy markets to higher levels. Of course, there are no guarantees that either of these scenarios will occur or that demand follows historical trends for this time of year.
For the time being, global oil prices remain stable, with bullish sentiment continuing to trickle through into many of the technical indicators.
After breaking below the $1,800 mark to its lowest point in four months, the precious metal is seen trading within a range. As of writing, the XAUUSD pair was trading around $1,776.
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|Wednesday, 02 December 2020
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