Our most recent Commodities Weekly Publication, which looks at selected markets within Precious Metals, Energy, Base Metals and Agriculture has been updated.
Within these asset classes, we are seeing early signs of improvement in Energy, as both Oil and Natural Gas show signs of stabilisation.
WTI Crude Oil (CL) has been in a bear trend since the beginning of the year, but prices are showing signs of improvement as they move into consolidation above the USD42.05 low of June.
Improving weekly momentum studies and early signs of a positive signal in the Tension Indicator suggest further gains in the coming weeks. A close above USD46.50 would help to reduce downside risks, and prompt an Upgrade to Neutral.
Additionally, from a cross asset perspective, our most recent FX Weekly Publication highlights continued downside risks in USD/CAD into the coming weeks.
Expectations are for a break below critical multi-month support at the 1.2455/60 low of May 2016. Ensuing CAD strength would subsequently help to improve investor sentiment within Oil, and prompt further short-covering as commodities investors reduce short Oil positions.
Coupled with signs of improvement in the broader PowerShares Commodities DB Index Tracking ETF (DBC),
we believe Oil prices, and the Energy sector in general, could be poised to strengthen in the coming weeks.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.