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Oil prices moved sharply higher during the far east market open on Monday, initially reaching 66.52, just shy of the 2018 high of 66.63. Prices have recently moved higher partially due to two reasons today, first, China’s Shanghai Yuan-denominated oil futures first day of trading caused prices to bid higher as this newly available market will have a significant impact on the US dollar-dominated oil markets.
I will have a detailed report on that in a few days. Secondly, the other key event today that drove prices higher was the Iranian backed rebels in Yemen launched missiles at Saudi Arabia capital of Riyadh in their efforts to cause havoc and disruption of the world’s leading producer of oil economy.
However, there are several events currently unfolding which will soon see oil prices test $76.47.
Demand:
Global demand lead by E7 economies demand continues to outpace world supply. The unprecedented oil demand from the rapidly developing emerging economies and the 7 largest emerging markets (E7 China, India, Brazil, Mexico, Russia, Turkey) will sustain oil prices for the next 3 decades as these E7 economies annual gross domestic product (GDP) will witness annual growth rates between 4 1/2%-12% well into the mid 21st century.
Geopolitics:
Continued Venezuela sanctions and political turmoil will continue to impact Venezuela production cuts and reduce world supply by 1.5 million barrels/day. Events out of the middle east, China Sea, N Korea, Malaysia, Eastern Mediterranean,m Libya, Nigeria continue to impact oil price volatility and potentially affect global supply.
Speculation:
Short-term, traders will continue to bid prices higher on the futures market as northern hemisphere demand moves into the peak season while long-term speculators will seek price dips and breakouts to position for long-term global demand.
Oil is a short-term buy for $76.47 target while bids ahead of $51.43 will support medium-term target of $88.39 in the weeks ahead. Look for daily prices to open above 67.84 and close higher followed by a weekly open and higher close above 67.84 to confirm further price rise initially targeting $68.65 followed by $69.91, $70.92, $71.93, and $76.47 in the weeks ahead.
Trade War Concerns Fuel Volatile Markets
/in Uncategorized /by vipercapitalUS stocks, commodities and US Dollar witnessed volatile swings this week fueled by trade war concerns after President Trump’s continued rhetoric about potentially adding an additional $100M in Chinese tariffs. This latest round and potential escalation in the back-and-fourth comments between the two nations officials steadied sentiment early in the week, but as the week progressed, markets reacted less and less to walk backs from the President’s advisors.
Friday’s March employment report did little to change the momentum after the payrolls number came in well below expectations, though many analyst cited poor weather largely responsible for the weak employment numbers.
Volumes remained relatively muted considering the outsized move by many indices with the buyback quiet period remaining in effect ahead earnings season. Treasuries sold off and the Dollar firmed early on before risk off flows pushed yields lower. For the week the S&P fell 1.4%, the Dow dropped 0.7% and the NASDAQ lost 2%.
West Texas Intermediate (WTI) also had a volatile week closing lower at 61.90 despite crude oil inventories declining 4.6 million barrels for the week as trade war concerns could possibly threaten the global industrial rebound.
Corporate news was relatively light this week as markets awaited the new earnings season. All eyes were on Amazon as President Trump dispatched a slew of negative tweets and comments about the company and its CEO Bezos, though White House advisers insist no action against Amazon is forthcoming.
News resurfaced that MGM may consider acquiring Wynn if the price were right, as Wynn reels from scandals involving its now-resigned namesake CEO. Humana rose on a report of Walmart’s interest in acquiring the health insurer. The Big Three automakers lifted after posting big beats in their March sales figure.
Tesla deliveries impressed investors despite not hitting Model 3 output expectations yet, though the company continues to expect the rate to increase “rapidly” through Q2. Viacom shares were weighed on by reports that CBS submitted a bid below their current market value.
Next week’s focus will be March US Consumer Price Index (CPI) and Core CPI as any higher than expected number will certainly witness raise concerns that the Federal Reserve will raise rates in 2018 beyond the expected 3 rate hikes.
Oil Bid Higher Now Targets $76.47
/in Oil Prices, Uncategorized /by vipercapitalhttp://fxlivetrader.omnovia.com/archives/352270
Oil prices moved sharply higher during the far east market open on Monday, initially reaching 66.52, just shy of the 2018 high of 66.63. Prices have recently moved higher partially due to two reasons today, first, China’s Shanghai Yuan-denominated oil futures first day of trading caused prices to bid higher as this newly available market will have a significant impact on the US dollar-dominated oil markets.
I will have a detailed report on that in a few days. Secondly, the other key event today that drove prices higher was the Iranian backed rebels in Yemen launched missiles at Saudi Arabia capital of Riyadh in their efforts to cause havoc and disruption of the world’s leading producer of oil economy.
However, there are several events currently unfolding which will soon see oil prices test $76.47.
Demand:
Global demand lead by E7 economies demand continues to outpace world supply. The unprecedented oil demand from the rapidly developing emerging economies and the 7 largest emerging markets (E7 China, India, Brazil, Mexico, Russia, Turkey) will sustain oil prices for the next 3 decades as these E7 economies annual gross domestic product (GDP) will witness annual growth rates between 4 1/2%-12% well into the mid 21st century.
Geopolitics:
Continued Venezuela sanctions and political turmoil will continue to impact Venezuela production cuts and reduce world supply by 1.5 million barrels/day. Events out of the middle east, China Sea, N Korea, Malaysia, Eastern Mediterranean,m Libya, Nigeria continue to impact oil price volatility and potentially affect global supply.
Speculation:
Short-term, traders will continue to bid prices higher on the futures market as northern hemisphere demand moves into the peak season while long-term speculators will seek price dips and breakouts to position for long-term global demand.
Oil is a short-term buy for $76.47 target while bids ahead of $51.43 will support medium-term target of $88.39 in the weeks ahead. Look for daily prices to open above 67.84 and close higher followed by a weekly open and higher close above 67.84 to confirm further price rise initially targeting $68.65 followed by $69.91, $70.92, $71.93, and $76.47 in the weeks ahead.
Crude Oil Moves Higher on IEA Global Deficit Warning
/in Oil Futures, Uncategorized /by vipercapitalCrude oil moved higher on Wednesday after the US weekly crude oil inventories report came in worse than expected with a -2.6 million barrel in inventories from last week, maintaining a draw down in inventories for 2018 and 45 million barrel draw down last 6 months. Other factors cited as motivation for traders to bid crude oil futures contracts are record gasoline demand, falling Venezuelan production and rising tensions between Iran and Saudi Arabia.
Iranian backed rebels in Yemen continue to show little regard for civilian casualties in what the United Nations is calling “the worst man-made humanitarian crisis of our time.” The war has had many atrocities and the players have broken down into multiple factions.
Trump will push the Saudi Crown Prince to try to find a way to end the conflict, yet at the same time work together to push back on Iran’s nuclear ambitions and crack down on their involvement in the war in Syria. Saudi Crown Prince Mohammed bin Salman said that Saudi Arabia would develop nuclear weapons if Iran persists with it’s nuclear weapons development.
From a technical perspective, West Texas Light Crude trades within a consolidating wedge formation with a series of daily lower highs and daily higher lows with a break out imminent. To the upside, look for a daily open and higher close above $64 to support further rise to the 2018 high of $66.63 with a sustained move above this level targeting 68.65, 69.91 and 71.93 into the days ahead.
International Energy Agency Warns of World Oil Deficit
/in Oil Futures, Uncategorized /by vipercapitalCrude oil prices have remained firm this week despite Wednesday’s U.S. Energy Information Administration’s (EIA) weekly report on the change in the number of barrels of crude oil held in inventory by commercial firms during the past week coming in at +5.0 million barrel surplus.
U.S. oil output hit a record last week rising to 10.38 million bpd according to the Energy Information Administration. However, for the year inventories still remain in draw down and last 6 months a -42 million barrel draw down in inventories.
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Also this week, the International Energy Agency (IEA) issued a stern warning that oil demand could outstrip supply despite the ramp up in recent shale output. IEA stated in its monthly report “With supply from Venezuela clearly vulnerable to an accelerated decline, without any compensatory change from other producers, it is possible that the Latin American country could be the final element that tips the market decisively into deficit.” U.S. Venezuelan sanctions and political unrest has driven capital investment away from Venezuela and specifically the countries oil industry.
IEA also revised higher its estimate of daily global oil demand growth in 2018 to 1.5 million barrels per day (bpd) which brings the total global daily oil demand nearing 100 million barrels per day with forecast exceeding this number within the next 12 months.
The recent increase in U.S. output is viewed as one of the headwinds for oil prices, though continued emerging market demand fueled by unprecedented emerging market growth will likely keep oil prices firm into the months ahead as the northern hemisphere moves into high demand season. Long-term forecast views a steady rise in global oil demand well into the mid 21st century.
Inflation Concerns on Hold with Today’s CPI
/in Oil Prices, Uncategorized /by vipercapitalDollar suffers broad based selling during today’s early US session as US CPI data came in as expected with +0.2% for February. The prior January +0.5% may have been an anomaly and is a relief to market participants. Additionally, the US Dollar was weighed down today by political turmoil in the White House. Headline CPI accelerated to 2.2% year on year (yoy) with core CPI unchanged at 1.8% yoy, with both meeting expectations.
However, today’s CPI data will not change Fed’s path to hike in rates during next week’s 2 day Federal Open Market Committee meeting and likely hike rates again in June. However, a 4th rate hike this year is looking unlikely unless CPI data between now and June shows unexpected rise.
West Texas Intermediate (WTI) remains firm holding above $60 currently at $60.62 ahead of tomorrows weekly crude oil inventories data to be released at 10:30 am EST.
On a separate note, US Secretary of State Rex Tillerson was fired by President Donald Trump after numerous clashes. Trump confirmed by tweeting “Mike Pompeo, Director of the CIA, will become our new Secretary of State. He will do a fantastic job! Thank you to Rex Tillerson for his service! Gina Haspel will become the new Director of the CIA, and the first woman so chosen. Congratulations to all!”