FTSE increases despite a slowdown of UK economic growth in July. The Baker Hughes rig count is a key indicator for WTI oil.
The FTSE is rising, but the UK economy is slowing.
The FTSE is expected to have a better start than its European counterparts. Despite today’s dismal UK GDP statistics, the market remains optimistic on reports of a chat between presidents Xi Jinping and Joe Biden.
In July, the UK economy expanded at a slower rate than predicted. GDP increased by only 0.1 percent month over month, down from 1% in June and below estimates of 0.6 percent. The slower growth happened as the number of instances of covid increased, and the NHS app advised a large number of employees to self-isolate.
Where does the FTSE go from here?
The FTSE has been moving lower this week, but it found support at 6990 yesterday before recovering higher. The MACD’s declining negative bias gives bulls optimism – a bullish crossing would be a buy signal.
Any substantial recovery will require a recapture of 7090, a level that served as a stopgap for losses at the end of August on numerous occasions. 7120 the 50 and 200 sma might be a difficult nut to crack as well.
A fall below 6990, on the other hand, would be noteworthy, opening the door to additional losses below the late August low of 6925.
Baker Hughes rig count is ahead of WTI crude oil.
Oil prices are rising as a result of tightness in the US oil market following Hurricane Ida, which is counteracting China’s ambitions to export crude oil from its stockpiles.
Oil dropped on reports that it will put oil into the market through a public auction to relieve the burden on refineries caused by excessive prices.
Meanwhile, ten days after Hurricane Ida, US output is still slow to recover. The market is being supported by a decrease in supply.
Baker Hughes will release its rig count later today.
Where next for crude oil?
WTI crude is rebounding from steep losses yesterday. The price found support at 67.50 a level which has capped losses several times over the past three weeks. However the price continues to trade below its falling trendline dating back to early July so the dominant trend is still bearish.
Still a move above the 200 sma on the 4 hour chart, combined with the RSI pointing northwards and heading into bullish territory is keeping the buyers hopeful. However, the immediate upside sees several points of resistance, the 50 sma at 68.85 and the falling trendline resistance at 69.50. A move above here could see 70.50 the September high come into play.
Should the 200 sma fail to hold, the price could test 67.50 one again. A break below this level could open the door to deeper losses towards 6500 low 9 August and 61.50 the August low.