This Week is Set to Intrigue: Who Will Be the Fed’s New Watchdog
Markets finished last week with sell-offs. Crude is among the most suffered markets as the Brent crude benchmark fell by 4.5% to $78.47 per barrel. Lockdowns in Europe and expectations of possible interventions of the United States and China are pressuring crude prices.
Last Friday the Austrian government announced a 10-day lockdown that could even be extended. Germany’s health minister Jens Spahn hasn’t ruled out the fact that the national lockdown could be introduced. “We are in a position where nothing should be ruled out,” the minister said at a news conference. And this news came at a time during which some German states were already under partial lockdown measures. Bavaria, which is one of the most affected states, announced measures including the cancellation of all Christmas markets and the closing of bars, clubs and nightclubs until at least December 15. Theaters, cinemas, opera houses and spectator sports will be allowed to operate at 25% capacity for people who are vaccinated or have negative test result.
The United States may release between 20 to 30 million barrels of oil from its strategic reserves in order to drag crude prices down. Some 30 million barrels could be released in the market by some other countries, including China. India said it would not use its strategic oil reserves to intervene in the market.
Goldman Sachs believes that the drop in oil prices last Friday is not fundamentally justified. Speculation about a U.S. stock release has already pushed oil prices down by about $4 a barrel in recent weeks and additional supplies of up to 100 million barrels are already priced in, Goldman Sachs Damien Courvalin and Callum Bruce oil analysts said in a note. "Such a release would only provide a short-term fix to a structural deficit". Goldman Sachs confirmed its forecast of Brent prices average $85 per barrel during the final quarter of the year and $81.30 per barrel in 2022.
However, technically, we may have room for crude prices to go further down. The nearest strong support level for Brent crude benchmark is formed by the fast-moving average EMA21 on the weekly timeframe that is crossing $77 per barrel. If this level is passed, prices may go deeper to $73.7-$74 per barrel where the April 2020 upward trend’s major support level is located. It is my personal view that the later level is the one where buy positions could be considered with the upward trend remaining intact.
This week will be particularly interesting as U.S. President Joe Biden is going to announce the new Federal Reserve (Fed) head, who will take the Fed’s reins after February 2022. The White House has announced that the President’s decision could be announced by Thanksgiving Day on November 25.The fact that there are rumors that Jerome Powell could be replaced by Lael Brainard, a current Fed Governor, may increase volatility in the markets. Markets seem to be favoring familiar faces against newcomers such as Mrs. Brainard. But in general, markets are likely to close November on some positive tune or at least neutrally.
Last Friday the Austrian government announced a 10-day lockdown that could even be extended. Germany’s health minister Jens Spahn hasn’t ruled out the fact that the national lockdown could be introduced. “We are in a position where nothing should be ruled out,” the minister said at a news conference. And this news came at a time during which some German states were already under partial lockdown measures. Bavaria, which is one of the most affected states, announced measures including the cancellation of all Christmas markets and the closing of bars, clubs and nightclubs until at least December 15. Theaters, cinemas, opera houses and spectator sports will be allowed to operate at 25% capacity for people who are vaccinated or have negative test result.
The United States may release between 20 to 30 million barrels of oil from its strategic reserves in order to drag crude prices down. Some 30 million barrels could be released in the market by some other countries, including China. India said it would not use its strategic oil reserves to intervene in the market.
Goldman Sachs believes that the drop in oil prices last Friday is not fundamentally justified. Speculation about a U.S. stock release has already pushed oil prices down by about $4 a barrel in recent weeks and additional supplies of up to 100 million barrels are already priced in, Goldman Sachs Damien Courvalin and Callum Bruce oil analysts said in a note. "Such a release would only provide a short-term fix to a structural deficit". Goldman Sachs confirmed its forecast of Brent prices average $85 per barrel during the final quarter of the year and $81.30 per barrel in 2022.
However, technically, we may have room for crude prices to go further down. The nearest strong support level for Brent crude benchmark is formed by the fast-moving average EMA21 on the weekly timeframe that is crossing $77 per barrel. If this level is passed, prices may go deeper to $73.7-$74 per barrel where the April 2020 upward trend’s major support level is located. It is my personal view that the later level is the one where buy positions could be considered with the upward trend remaining intact.
This week will be particularly interesting as U.S. President Joe Biden is going to announce the new Federal Reserve (Fed) head, who will take the Fed’s reins after February 2022. The White House has announced that the President’s decision could be announced by Thanksgiving Day on November 25.The fact that there are rumors that Jerome Powell could be replaced by Lael Brainard, a current Fed Governor, may increase volatility in the markets. Markets seem to be favoring familiar faces against newcomers such as Mrs. Brainard. But in general, markets are likely to close November on some positive tune or at least neutrally.
