Two trades to watch: FTSE, WTI oil

FTSE extends losses bringing key support into focus. WTI oil looks to EIA stock pile data

Energy 3

FTSE extends losses

The UK index is heading for a mildly softer start following UK inflation data and weak Chinese data overnight. 

UK inflation jumped to 3.2% YoY in August, up from 2% in July and ahead of 2.9% forecast. Core CPI also surged to 3.1%, up from 1.8%. Rising inflation, combined with yesterday’s encouraging jobs report raises bets that the BoE could move to hike interest rates sooner rather than later. 

Overnight, weak Chinese data reinforced concerns over slowing global growth. Growth in Chinese factories and retail sales continued slowing. 

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Where next for the FTSE? 

The FTSE is set to open a few points lower, extending losses from the previous session. The index has been trading within a 200 point range over the past 6 weeks, capped by 7200 on the upside and 6990 on the lower band. The RSI is in bearish territory and pointing lower suggesting that there could be more downside to come.  

The downside is guarded by 6990 last week’s low. A break below this level could open the door to 6925 July 27 low and on to 6804 July low. 

Meanwhile, any recovery would need to retake the 100 & 50 sma at 7078 and7090 respectively. A move above here could bring 7200 last week’s high back into play. 


Oil looks to EIA data 

Oil prices are on the rise after industry data revealed a larger than expected draw down in inventories and on optimism surrounding he demand outlook. The API data revealed that crude stockpiles fell by 5.4 million barrels, expectations had been for a 3.5 million decline 

Furthermore, the hit from Hurricane Ida was larger than anticipated and now Tropical storm Nicholas is in the region. 

Meanwhile the IEA said that after demand fell owing to the delta variant, a rebound in demand is expected heading towards the end of the year. 

Weaker Chinese data limits the upside.

EIA stockpile data due later.  

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Where next for WTI crude oil? 

Oil moves higher for a third straight session. The falling trendline dating back to mid-July guards the upside whilst the 50 & 100 sma are protecting the downside. The RSI is supportive of further gains. 

Any move higher must break above the falling trendline resistance at 71.10 in order to test 72.00 round number and head towards 74.00 the August high. 

On the flip side, a move lower must break below the 50 & 100 sma at 6930 and 6900 respectively to head towards support at 67.45 the September low and 65.00 the July low. 

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