 Hello and welcome to this market update on Tuesday the 26th of July and in short video I'll be looking at the recent slide in oil prices and whether the rally we've seen since mid-January has run its course Since the highs in June the characteristics of the price action would appear to suggest that we could well see further falls In the product in the oil price as the price continues to decline in a slow down or channel And it is currently approaching the 200 day moving average on both the Brent and the WTI contracts Now, I think while the WTI contract has taken out the May lows as we can see from this chart here We haven't as yet seen the same thing happen on the Brent contract. However, that doesn't mean that we won't Now since the end of May we've seen the rig count number start to rise again from a lower 404 to 462 at the end of last week which suggests that we've probably seen the lows here in terms of the rig count and With us driving season coming to an end and gasoline inventory still near record levels It would appear that markets have overestimated the ability of Markets to work off the excess capacity now U.S. Driving season still has around about six weeks to go it generally ends the first weekend in September around about a Labor Day holiday But the fact is that gasoline inventory still remain at Five-year highs and at this point of the season they usually an awful lot lower than that When you combine that with the fact that the US dollar is also near its best level since early March The impact of the stronger dollar is also making its presence felt which makes this week's FOMC meeting all the more important in terms of signalling with respect to the glide path for US interest rates Since June 13th the prospect of the December rate rise has remained steady in or around that 45% level on the WIRP function of the Bloomberg Terminal So US policy makers, I think will be keen to keep expectations near to or around that type of level I think they're unlikely to want to be too hawkish as a stronger dollar acts as a fiscal tightener and the US dollar has already Appreciated 4% from its pre-Brexit lows on a trade-weighted basis at around around about the 23rd of June It was trading at around about 93 52. It's now trading just above 97 so I think FOMC officials will be very very keen to make sure that it doesn't really appreciate that much more So let's look at the charts here as we can see from the Brent chart the daily chart that we've got in front of me The key supports on Brent oil set at $43.50. That's this horizontal line from the May lows and the 200 day moving average at $42.15 with resistance at $45 and $0.50 which is around about the previous July lows that we've sought around about here now the oscillator is still looking Relatively oversold which does appear to suggest that maybe if we do get a retest of these May lows We get a we may get a little bit of a rebound for the direction of travel is fairly clear here We are in a very a very nice downward channel which would appear to suggest that potentially We could well see further losses over the course of the next few weeks We're also looking to approach the thirty eight point two percent retracement of the entire up move from the lows that we saw in early in early January mid to early January Which also coincides round about with the 200 day moving average So if we now go to the WTI contract we can do a similar sort of analysis Similar sort of analysis here as well As we can see as I highlighted earlier here. We we've broken through the May lows which we haven't as yet done on The Brent contract, but again the similarities are certainly Quite prescient here. We have got decent support again around about $40 a barrel If we do a similar sort of retracement Levels here. We can we can again see similar sort of support levels coming in around about in this case $41 and 57 cents on WTI and then below that $40 a barrel with resistance at $44 and 30 cents which again coincides with the previous July lows that we broke through In the middle of last week Thanks very much for listening. This is Michael Houston talking to you from CMC Markets