The situation has chnaged in financial markets and the good economic data now is bad for risk assets in general, sending them lower. This is because the FED is thinking about slowing down with rate hikes as the US economy fell into a recession in H1 and is leaving that decision to the economic data. If data comes in positive and the economy can support further strong hikes they will continue, which is negative for risk assets.

So, WTI crude Oil has been bearish in the last three months as the FED delivered two 75 bps rate hikes back to back. But they’re thinking about slowing down, which has improved the sentiment and crude Oil retraced higher from around $86 to $97. But, today we are seeing a strong bearish reversal and Oil lost around $7, now heading toward $90.

WTI Oil Daily Chart – Rejected by the 50 SMA

Crude Oil forms a large bullish engulfing candlestick

The US CB consumer confidence turned positive and made quite a jump ion August, which is a positive sign for the US economy in the coming months, despite inflation remaining high. This is another factor which supports another strong hike by the FED, not that they are having any impact on inflation. So, the risk sentiment has turned negative again, with stock indices declining, while crude Oil has heading below $90 again is this selloff continues.

US Consumer Confidence for August 20220

• Consumer confidence better-than-expected at 103.2 vs. 97.7 estimated
• The prior month was revised to 95.3 from 95.7
• Present situation 145.4 in August vs. 139.7 in July (was 141.3)
• Expectations index 75.1 in August vs. revised 65.6 in July (was 65.3)
• US jobs hard to get index 11.4 in August vs. July 12.4 (was 12.3)
• One year consumer inflation expectations 7.0% vs. 7.4% in July (was 7.6%)

A nice bump up in the consumer confidence which runs parallel to the lower oil prices and is congruent with the Michigan consumer sentiment data as well. JOLTS job openings were strong as well, so the economic picture is improving in the US.

US WTI Crude Oil Live Chart