E-mini S&P 500

E-mini S&P 500 (ES) Futures Outlook: A New Threat to Oil Supply

  • Norwegian offshore workers are on strike, which might hurt the oil supply.
  • Joe Biden is considering easing China tariffs, which has rekindled the hope of inflation peaking in the US.
  • RBA is among the central banks raising rates rapidly to tame inflation.

E-mini S&P 500 (ES) futures price is struggling to retain any gain as oil prices weigh heavily on the index. Investors woke up Tuesday morning to the news that Norwegian offshore workers were going on strike demanding wage raises due to rising inflation. The global economy is running on low supply after the ban on Russian oil, and this new development might worsen the situation.

“Their action is set to exacerbate the pain of rising prices and is leading to even tighter supply in the already squeezed energy market. It comes at a highly fragile time geopolitically, given that the EU is facing the threat that Russia will turn off the taps abruptly, potentially plunging vital industries into crisis,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

This news has seen the US futures market edging lower after a bullish start to the day. The bullish momentum was fueled by US President Joe Biden’s bid to tame inflation by easing US tariffs on China.

US Treasury Secretary Janet Yellen met Chinese Vice Premier Liu virtually, where both sides agreed to coordinate macro policies.

“The Chinese side expressed concern over issues such as lifting additional tariffs and sanctions imposed by the United States on China and the fair treatment of Chinese companies. Both sides agreed to maintain dialogue and communication, ” the Chinese ministry said.

Recession worries continue to plague investors as central banks worldwide raise interest rates. The RBA raised rates yesterday from 0.85% to 1.35%, a 50bps increase.

E-mini S&P 500 (ES) futures technical outlook:

E-mini S&P 500 (ES) futures 4-hour chart
E-mini S&P 500 (ES) futures 4-hour chart

The 4-hour chart shows the price falling after experiencing resistance at 3854.00. This level acted as support on May 19. The price attempted to break above the 30-SMA but failed to trade above. It is back to trading below the SMA, a sign that bears are in charge. The RSI has also started trading below 50, which favors bearish momentum.

The next target for bears will be at 3749.00, a critical support level. It has acted as support on many previous occasions, including July 1. A break below this level could mean lower prices with a possible pause at the June 17 support at 3658.50.