U.S. Stocks Set To Open Higher As Crude Oil Breaks Out To The Upside

S&P 500 futures are gaining ground in premarket trading as oil price upside makes traders more optimistic about recovery.

WTI Oil Breaks Above The Resistance At $42.50

WTI oil has finally managed to get above the nearest resistance at $42.50 and continues its upside move.

For many weeks, continued problems on the coronavirus front put pressure on oil and did not allow it to gain more upside momentum.

There are two major catalysts behind oil’s move.

First, yesterday’s API Crude Oil Stock Change report showed that crude inventories have declined by 8.59 million barrels.

As I wrote in my recent article, additional oil price upside will require a material decline in inventory levels. Now that crude inventories have started to trend down, traders will rush to place their bullish bets on oil and oil-related stocks.

Second, the U.S. dollar continues to decline, and the U.S. Dollar Index has settled below the 93 level, providing support to commodities.

Meanwhile, S&P 500 futures are gaining ground in premarket trading as higher oil prices boost investors’ morale.

Gold Rallies Above $2000 Per Ounce

Spot gold has managed to get above the $2000 level and is trading close to $2050 level on rumors that Fed will keep rates low for years in order to boost inflation.

Spot silver has also rallied to new highs, trying to settle above $27.00 per ounce.

Low interest rates and weak dollar present a perfect setup for gold and silver upside so the current rally has good chances to continue.

Meanwhile, gold and silver stocks are set to experience significant upside as traders rush to bet on precious metals.

ADP Employment Change Report Shows That Private Sector Added Just 167,000 Jobs In July

The U.S. has just provided ADP Employment Change report for July which indicated that only 167,000 jobs were added in the private sector in July. Analysts expected that the private sector added 1.5 million jobs.

The report shows that problems on the coronavirus front have put heavy pressure on the job market in July. However, there’s also good news in the report since data for June was revised from 2.4 million to 4.3 million.

It remains to be seen whether the market will view the report as a negative catalyst. Poor jobs data may push Republicans and Democrats to reach coronavirus aid package deal in the upcoming days. Typically, additional stimulus pushes stocks higher.

Reprinted from fxempire, the copyright all reserved by the original author.

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