Oil Prices WILL Fall Demand concerns Fed Rate Hikes
Oil prices continued to trend lower in morning trade in Asia, with WTI heading toward HKEX:78 and Brent moving closer to $82.
Canadian Government Admits It’s Short Tens Of Thousands Of Oil Workers
The Fed has repeatedly indicated that is it not done with rate hikes, which traders see as countering any growing demand from China.
Time Frame: 1D
Current Trend: Bearish
Sentiment: Overbought (based on 7-period RSI)
Forecast: STRONG Bearish
The market is testing a major horizontal structure 79.46.
Taking into consideration the structure & trend analysis, I believe that the market will reach 73.95 level soon.
MY TARGETS
74.75
72.55
70.25
68.95
if boken, then
64,55
61,95
59,80
Canadian Government Admits It’s Short Tens Of Thousands Of Oil Workers
The Fed has repeatedly indicated that is it not done with rate hikes, which traders see as countering any growing demand from China.
Time Frame: 1D
Current Trend: Bearish
Sentiment: Overbought (based on 7-period RSI)
Forecast: STRONG Bearish
The market is testing a major horizontal structure 79.46.
Taking into consideration the structure & trend analysis, I believe that the market will reach 73.95 level soon.
MY TARGETS
74.75
72.55
70.25
68.95
if boken, then
64,55
61,95
59,80
Comment:
Week Ahead - May 8th
The upcoming week in the US will be dominated by news related to prices, including the inflation rate, producer prices, and export and import prices, as well as the Michigan consumer confidence CPI gauge. Additionally, CPI figures are scheduled to be released in China, Mexico, Brazil, India, and Russia. In the UK, the Q1 GDP growth data will be released, and investors will be closely monitoring the Bank of England's interest rate decision. Elsewhere, China is set to publish external trade data, and Australia will report on consumer and business confidence.
The upcoming week in the US will be dominated by news related to prices, including the inflation rate, producer prices, and export and import prices, as well as the Michigan consumer confidence CPI gauge. Additionally, CPI figures are scheduled to be released in China, Mexico, Brazil, India, and Russia. In the UK, the Q1 GDP growth data will be released, and investors will be closely monitoring the Bank of England's interest rate decision. Elsewhere, China is set to publish external trade data, and Australia will report on consumer and business confidence.
Comment:
Oil Soars As U.S. Job Market Stays Strong
traders bet on a rebound after the recent sell-off
WTI oil moved above $71.00 as traders reacted to the Non Farm Payrolls report.
Brent oil settled above $75.00
WTI oil rallied as recession fears eased after the release of Non Farm Payrolls report. Traders used the recent sell-off as an opportunity to build long positions in WTI oil.
If WTI oil climbs above the $71.70 level, it will head towards the resistance at $72.70. A move above $72.70 will push WTI oil towards the $74.00 level.
R1:$71.70 – R2:$72.70 – R3:$74.00
S1:$70.30 – S2:$69.20 – S3:$68.00
Brent oil has also managed to gain strong upside momentum in today’s trading session as risk appetite increased.
If Brent oil moves above the $75.50 level, it will head towards the resistance at $76.25. A move above this level will push Brent oil towards the $77.50 level.
R1:$75.50 – R2:$76.25 – R3:$77.50
S1:$74.60 – S2:$73.00 – S3:$71.70
Crude oil markets have fallen a bit significantly during the trading week, only to turn around and find plenty of buyers willing to step in and trying to pick the market back up. By doing so, the market continues to see extreme volatility.
WTI Crude Oil Weekly Technical Analysis
The West Texas Intermediate Crude Oil market fell rather hard during the trading week, as we continue to see a lot of negativity around the idea of global demand. However, the $65 level offered enough support to turn things back around, and it now looks as if we may be trying to find the bottom of a summer range.
This does make a certain amount of sense, as the market tends to find some type of area that it wants to trade in during the “summer driving season” in the United States. If we were to break down below the bottom of the candlestick though, that would lead to even further losses, and would show that the economy is coming undone completely. On the upside, the 50-Week EMA sits right around $81.65, and that’s somewhere near the top of this overall consolidation area.
Brent Crude Oil Weekly Technical Analysis
The Brent market also fell rather hard, breaking below the $70 level at one point during the week. However, we have turned around quite drastically to support that area, and now it looks like Brent is finding its own range as well. The 50-Week EMA sits near the $86.50 level, and is offering a significant amount of resistance. On the other hand, if we were to break down below the tale of the candlestick for this week, that would be a very negative turn of events and could send this market down to the $60 level.
Again, both grades of oil are going to be paying close attention to the global economy, and the turnaround that we had seen late in the week was a little bit suspicious, as if somebody was stepping in and trying to support the market.
traders bet on a rebound after the recent sell-off
WTI oil moved above $71.00 as traders reacted to the Non Farm Payrolls report.
Brent oil settled above $75.00
WTI oil rallied as recession fears eased after the release of Non Farm Payrolls report. Traders used the recent sell-off as an opportunity to build long positions in WTI oil.
If WTI oil climbs above the $71.70 level, it will head towards the resistance at $72.70. A move above $72.70 will push WTI oil towards the $74.00 level.
R1:$71.70 – R2:$72.70 – R3:$74.00
S1:$70.30 – S2:$69.20 – S3:$68.00
Brent oil has also managed to gain strong upside momentum in today’s trading session as risk appetite increased.
If Brent oil moves above the $75.50 level, it will head towards the resistance at $76.25. A move above this level will push Brent oil towards the $77.50 level.
R1:$75.50 – R2:$76.25 – R3:$77.50
S1:$74.60 – S2:$73.00 – S3:$71.70
Crude oil markets have fallen a bit significantly during the trading week, only to turn around and find plenty of buyers willing to step in and trying to pick the market back up. By doing so, the market continues to see extreme volatility.
WTI Crude Oil Weekly Technical Analysis
The West Texas Intermediate Crude Oil market fell rather hard during the trading week, as we continue to see a lot of negativity around the idea of global demand. However, the $65 level offered enough support to turn things back around, and it now looks as if we may be trying to find the bottom of a summer range.
This does make a certain amount of sense, as the market tends to find some type of area that it wants to trade in during the “summer driving season” in the United States. If we were to break down below the bottom of the candlestick though, that would lead to even further losses, and would show that the economy is coming undone completely. On the upside, the 50-Week EMA sits right around $81.65, and that’s somewhere near the top of this overall consolidation area.
Brent Crude Oil Weekly Technical Analysis
The Brent market also fell rather hard, breaking below the $70 level at one point during the week. However, we have turned around quite drastically to support that area, and now it looks like Brent is finding its own range as well. The 50-Week EMA sits near the $86.50 level, and is offering a significant amount of resistance. On the other hand, if we were to break down below the tale of the candlestick for this week, that would be a very negative turn of events and could send this market down to the $60 level.
Again, both grades of oil are going to be paying close attention to the global economy, and the turnaround that we had seen late in the week was a little bit suspicious, as if somebody was stepping in and trying to support the market.
Comment:
Week Ahead: US CPI Report May Rock These 3 Markets
Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
Economic Calendar for Next Week
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
CPI Forecasts
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to remain steady at 5.0%.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
How Might the Markets React to the CPI Report?
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
Even as anticipation mounts ahead of the US jobs data due later today, investors may be bracing for more volatility in the week ahead thanks to another round of risk events.
Economic Calendar for Next Week
All eyes will be on the incoming US inflation data as well as speeches from financial heavyweights and other risk events which could spark some fresh action across markets.
Monday, May 8
UK bank holiday honouring Charles III coronation
EUR: Germany industrial production, ECB Chief Economist Philip Lane speech
Tuesday, May 9
CHN: China trade, money supply
AUD: Australia consumer confidence
EUR: ECB Chief Economic Philip Lane speech (IMF)
USD: Fed New York President John Williams speech
US President Joe Biden debt ceiling talks
Wednesday, May 10
EUR: Germany April CPI (final)
USD: US April CPI
Thursday, May 11
CNH: China PPI, CPI
GBP: UK BOE rate decision & press conference
USD: US PPI, initial jobless claims
G7 finance ministers meet in Japan
Friday, May 12
GBP: UK Industrial production, Bank of England Chief Economist Huw Pill speech
USD: University of Michigan consumer sentiment, Fed speeches
The April US consumer price index (CPI) report published on Wednesday 10th May will be exactly one week after the Federal Reserve raised rates and signalled a pause in further increases.
Given how Fed Chair Jerome Powell has left the door open to further tightening if incoming economic data warrants, this could add more spice to the report.
CPI Forecasts
Markets are forecasting:
CPI year-on-year (April 2023 vs. April 2022) to remain steady at 5.0%.
Core CPI year-on-year to cool 5.4% from the 5.6% in the prior month.
CPI month-on-month (April 2023 vs March 2023) to rise 0.4% from 0.1% in the prior month.
Core CPI month-on-month to cool 0.3% from the 0.4% in the prior month.
Ultimately, further evidence of inflation slowing down could reinforce expectations around the Federal Reserve pausing and eventually cutting interest rates. Should inflation remain sticky, this could rekindle bets around the Fed leaving interest rates higher for longer.
Expectations are rising over the Federal Reserve cutting interest rates with the chance of a 25-basis point cut in July currently priced at 53%, according to Fed funds futures! It will be interesting to see how the incoming inflation data shapes market expectations around the central bank’s next move.
How Might the Markets React to the CPI Report?
With all of the above discussed, here’s how these 3 assets could react to the US CPI report
USD Index
The past few months have been rough and rocky for the dollar as investors weighed the prospects of the Federal Reserve pausing and then eventually cutting interest rates. More pain could be in store for the dollar if US inflation cools more than expected in April.
A soft inflation print may drag the USD Index toward the 100.72 level. Should prices experience a bearish breakout, this could open the doors toward 100.
A sticky inflation print could throw a lifeline to dollar bulls, propelling back above 101.50 with 102.34 acting as a key level of interest.
SPX500_m
After being trapped within a range for the past few weeks, could a breakout be on the horizon for the SPX500_m?
If the inflation numbers beat expectations, this may trigger a bearish breakout on the SPX500_m – taking prices below the 4050-support level.
Should the inflation numbers come in lower than market forecasts, SPX500_m bulls could be injected with renewed confidence as expectations intensify over the Fed ending its rate cycle. This could send the index back toward the 4180 resistance level and beyond.
Gold
It may be wise to fasten your seatbelts for potential volatility on gold due to its high sensitivity to inflation data and US interest rate expectations. The precious metal remains bullish on the daily charts despite prices pulling back from near-record highs.
A soft inflation report could sweeten appetite for the zero-yielding asset as bets rise over the Fed cutting rates in 2023. This development could push the metal back towards the 2023 high of $2063 with bulls eyeing $2070 and the all-time high at $2075.
A stronger-than-expected inflation number could drag gold prices back toward the psychological $2000 level.
Comment:
The US Week Ahead
The US CPI Report will impact the EUR/USD on Wednesday. Following the US Jobs Report, a hotter-than-expected US CPI Report would refuel bets on a June Fed interest rate hike.
On Thursday, wholesale inflation and jobless claims figures will also draw interest before consumer sentiment numbers on Friday.
Investors should track FOMC member reactions to the US Jobs Report and the incoming US CPI Report.
According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike rose from 0.0% to 8.5%. On Friday, the US Jobs Report drove the modest rise. However, the US Jobs Report wiped out bets on a June Fed interest rate cut.
The US CPI Report will impact the EUR/USD on Wednesday. Following the US Jobs Report, a hotter-than-expected US CPI Report would refuel bets on a June Fed interest rate hike.
On Thursday, wholesale inflation and jobless claims figures will also draw interest before consumer sentiment numbers on Friday.
Investors should track FOMC member reactions to the US Jobs Report and the incoming US CPI Report.
According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike rose from 0.0% to 8.5%. On Friday, the US Jobs Report drove the modest rise. However, the US Jobs Report wiped out bets on a June Fed interest rate cut.
Comment:
Crude oil markets have fallen a bit significantly during the trading week, only to turn around and find plenty of buyers willing to step in and trying to pick the market back up. By doing so, the market continues to see extreme volatility.
Comment:
Again, both grades of oil are going to be paying close attention to the global economy, and the turnaround that we had seen late in the week was a little bit suspicious, as if somebody was stepping in and trying to support the market.
Comment:
An Expected Rates Hike
Powell’s 0.25% hike was expected, so when it became a reality, markets didn’t really react. But what changed was the narrative regarding the future price moves. Powell said that they will make further decisions based on the data that they get. So, Powell is no longer saying about further increases but about being data-dependent. The latter is irrelevant because the Fed is always data-dependent, at least in theory (theory says that there are no political influences on the Fed, too…). The former, however, means that the pause is on the table.
That’s what was said.
What does it mean? It means that if the inflation isn’t lower, they will have to raise rates again. Why? Because inflation is political – simple as that. That’s the thing that voters are most concerned with, and that’s a fact.
If the inflation does move lower, they will probably not be raising rates again.
Also, Powell added that he doesn’t plan to cut rates anytime soon.
“Inflation going to come down not so quickly,” he said, yesterday. “It will take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates.”
So, to summarize what’s likely to happen: the rates are either moving higher if the inflation doesn’t decline or the rates are staying where they are if inflation declines visibly.
In both cases, real interest rates (nominal rates minus expected inflation) are going to increase. So, both outcomes presented by Powell are bearish for gold and the rest of the precious metals sector.
People expect that it’s practically certain that the rates will stay as they are on the next Fed meeting and that they will then start to decline. In other words, the market participants think that the rates are going to decline within the next couple of months, but not necessarily in June.
Please note the contrast between the current expectations and what I wrote above as the scenarios that Powell pretty much revealed.
For a long time, we’ve been emphasizing that inflation is much stickier than many expect, so it’s much more likely that what Powell is saying about the rates and the outlook for them is much more realistic than what the market largely expects right now.
We’re probably in the “return to “normal”” part right now, and the most recent upswing was a bull trap. The “New Paradigm” top was likely the moment when many thought that interest rates could be kept very low for decades and during the crypto peak.
Even the name makes perfect sense in light of yesterday’s news and the current expectations. The “return to normal” in this case, means a return to “normally” low interest rates.
So, what does that all imply? That the market is likely to be surprised – negatively so. It’s obvious also from the technical point of view, and I’ve been writing about the bearish stock price forecast for quite a long time now.
Stocks just failed to move to new 2023 highs. They got close but declined shortly thereafter. It looks like we’re going to get the right shoulder of the head-and-shoulder top formation completed in the following weeks.
Commodities like crude oil and copper are already declining, and so do their producers.
Powell’s 0.25% hike was expected, so when it became a reality, markets didn’t really react. But what changed was the narrative regarding the future price moves. Powell said that they will make further decisions based on the data that they get. So, Powell is no longer saying about further increases but about being data-dependent. The latter is irrelevant because the Fed is always data-dependent, at least in theory (theory says that there are no political influences on the Fed, too…). The former, however, means that the pause is on the table.
That’s what was said.
What does it mean? It means that if the inflation isn’t lower, they will have to raise rates again. Why? Because inflation is political – simple as that. That’s the thing that voters are most concerned with, and that’s a fact.
If the inflation does move lower, they will probably not be raising rates again.
Also, Powell added that he doesn’t plan to cut rates anytime soon.
“Inflation going to come down not so quickly,” he said, yesterday. “It will take some time. And in that world, if that forecast is broadly right, it would not be appropriate to cut rates.”
So, to summarize what’s likely to happen: the rates are either moving higher if the inflation doesn’t decline or the rates are staying where they are if inflation declines visibly.
In both cases, real interest rates (nominal rates minus expected inflation) are going to increase. So, both outcomes presented by Powell are bearish for gold and the rest of the precious metals sector.
People expect that it’s practically certain that the rates will stay as they are on the next Fed meeting and that they will then start to decline. In other words, the market participants think that the rates are going to decline within the next couple of months, but not necessarily in June.
Please note the contrast between the current expectations and what I wrote above as the scenarios that Powell pretty much revealed.
For a long time, we’ve been emphasizing that inflation is much stickier than many expect, so it’s much more likely that what Powell is saying about the rates and the outlook for them is much more realistic than what the market largely expects right now.
We’re probably in the “return to “normal”” part right now, and the most recent upswing was a bull trap. The “New Paradigm” top was likely the moment when many thought that interest rates could be kept very low for decades and during the crypto peak.
Even the name makes perfect sense in light of yesterday’s news and the current expectations. The “return to normal” in this case, means a return to “normally” low interest rates.
So, what does that all imply? That the market is likely to be surprised – negatively so. It’s obvious also from the technical point of view, and I’ve been writing about the bearish stock price forecast for quite a long time now.
Stocks just failed to move to new 2023 highs. They got close but declined shortly thereafter. It looks like we’re going to get the right shoulder of the head-and-shoulder top formation completed in the following weeks.
Commodities like crude oil and copper are already declining, and so do their producers.
Comment:
Is Crude Oil likely to move down to the 64,58 level?
Uptrend scenario
An uptrend will start as soon, as the market rises above resistance level 73,03, which will be followed by moving up to resistance level 80,97.
Downtrend scenario
The downtrend may be expected to continue, while market is trading below resistance level 73,03, which will be followed by reaching support level 64,58.
Monthly forecast, May 2023
Uptrend scenario
An uptrend will start as soon, as the market rises above resistance level 73,03, which will be followed by moving up to resistance level 82,98.
Downtrend scenario
The downtrend may be expected to continue, while market is trading below resistance level 73,03, which will be followed by reaching support level 64,58 and if it keeps on moving down below that level, we may expect the market to reach support level 59,06.
Uptrend scenario
An uptrend will start as soon, as the market rises above resistance level 73,03, which will be followed by moving up to resistance level 80,97.
Downtrend scenario
The downtrend may be expected to continue, while market is trading below resistance level 73,03, which will be followed by reaching support level 64,58.
Monthly forecast, May 2023
Uptrend scenario
An uptrend will start as soon, as the market rises above resistance level 73,03, which will be followed by moving up to resistance level 82,98.
Downtrend scenario
The downtrend may be expected to continue, while market is trading below resistance level 73,03, which will be followed by reaching support level 64,58 and if it keeps on moving down below that level, we may expect the market to reach support level 59,06.
Comment:
Firm as Strong Jobs Data, OPEC+ Cuts Ease Recession Fears
Comment:
Oil traders downplaying concerns over demand and global oversupply, while shifting focus to US inflation data and Chinese economic indicators.
Comment:
Daily WTI Oil traders are trying to establish new higher support a $ 68.49 (S2). If successful, it could drive prices into $72.57 (S1). Since the trend is down, sellers are likely to come in on the first test of this area. Overcoming it, however, could trigger the start of an acceleration to the upside with $78.02 the next potential target.
On the downside, a failure to hold $68.49 (S2) will be a sign of weakness. This could be the trigger point for an acceleration into (S3) at $63.04.
Essentially, the near-term direction will be controlled by trader reaction to $68.49.
On the downside, a failure to hold $68.49 (S2) will be a sign of weakness. This could be the trigger point for an acceleration into (S3) at $63.04.
Essentially, the near-term direction will be controlled by trader reaction to $68.49.
Comment:
US Inflation Data Release to Impact Markets
On Wednesday, the United States is scheduled to release its consumer price inflation data for April. This report could offer more insight into interest rate changes. It is widely anticipated that the U.S. Federal Reserve will stop increasing rates, and this data could confirm those expectations. Additionally, traders will closely monitor various Chinese economic indicators this week. This includes trade, inflation, lending, and money supply figures for April. This will help market participants evaluate the economic recovery of the world’s second-largest oil consumer. As a result, crude prices may continue to benefit from the upward momentum.
On Wednesday, the United States is scheduled to release its consumer price inflation data for April. This report could offer more insight into interest rate changes. It is widely anticipated that the U.S. Federal Reserve will stop increasing rates, and this data could confirm those expectations. Additionally, traders will closely monitor various Chinese economic indicators this week. This includes trade, inflation, lending, and money supply figures for April. This will help market participants evaluate the economic recovery of the world’s second-largest oil consumer. As a result, crude prices may continue to benefit from the upward momentum.
Comment:
For traders looking to take advantage of the market's movements, it may be best to wait for signs of exhaustion before making any significant moves. This means looking for indicators that the market is running out of steam, which could include the formation of specific types of candles on a daily timeframe. I would not get involved in lower timeframes now.
Be Patient
However, it's worth noting that short-term traders may be able to take a risk and capitalize on the rebound that has occurred. While they may be fighting the overall trend of the market, there is still potential for profit in the short term.
Ultimately, the next few sessions are likely to be quite noisy as the market adjusts to the recent movements. However, for those who are patient and willing to wait for signs of exhaustion, there may be significant opportunities for profit in the days and weeks ahead.
At the end of the day, the crude oil market is experiencing significant volatility as investors grapple with several different factors that are affecting its value. While there are signs that a hard floor may be in place for the short term, there are still plenty of opportunities for profit for those who are patient and willing to wait for signs of exhaustion.
Be Patient
However, it's worth noting that short-term traders may be able to take a risk and capitalize on the rebound that has occurred. While they may be fighting the overall trend of the market, there is still potential for profit in the short term.
Ultimately, the next few sessions are likely to be quite noisy as the market adjusts to the recent movements. However, for those who are patient and willing to wait for signs of exhaustion, there may be significant opportunities for profit in the days and weeks ahead.
At the end of the day, the crude oil market is experiencing significant volatility as investors grapple with several different factors that are affecting its value. While there are signs that a hard floor may be in place for the short term, there are still plenty of opportunities for profit for those who are patient and willing to wait for signs of exhaustion.
Comment:
Massive losses for weeks
Why the oil price is currently showing a boost again
Last week Wednesday we reported on the sharp drop in oil prices. From the 12th. April to 3. May it was a $ 13 crash in WTI oil! And then came the turn. The price plunged really hard into the basement last Wednesday to almost $ 65. Let's ignore short-term exaggerations, then the WTI oil price last week saw Thursday at low levels around $ 67.60. Since then it has been going up to $ 72.52. In the chart we can see the course since the 11th. April.
Oil price rises noticeably – Correction of exaggeration
The oil futures market has been driven by fear of a recession in the United States for the past few weeks. As a result, there seems to have been a negative exaggeration in the oil price crash. If many important traders think, now having to take short wins with you – because it's time – then you like to see such a quick recovery in the oil price, because the traders can only smooth their shorts through purchases.
Recession in the United States?
Will the recession in the US – if it is actually rolling – significantly reduce the demand for oil, which could justify the already falling oil price? Well, on Friday at 2:30 p.m. they showed US labor market data for April: The US unemployment rate drops to 3.4% ( forecast 3.6% ). And: 253,000 new jobs were created in the USA in April ( Forecast + 180,000 ). So the US economy is running more robust than many analysts thought. Does that mean for the oil price? Possibly oil demand will continue to be at a higher level, which the futures market immediately priced in. Since Friday at 2:30 p.m. we have seen an increase in American WTI oil of $ 2.
Bloomberg statements
While fears of a US recession and bank collapse have recently unsettled the markets and pushed the oil price ( crude oil ) to its lowest level since the end of 2021, signals from physical demand indicate that at least part of the recent price weakness may have been exaggerated, Bloomberg said. On Monday, the dollar was weaker for the fifth day in a row, favoring the prospects for raw materials.
This week, traders will receive a number of forecasts about the development of the second half of the year. The OPEC publishes its monthly overview on Thursday, and before that US Energy Information Administration on Tuesday their short-term outlook. The world's largest oil producer, Saudi Aramco, will also announce its results.
The price of crude oil fell by around 11% this year as the most aggressive tightening campaign of the Federal Reserve Fears of an economic slowdown or recession in the United States have been fueling for a generation, although most investors now expect monetary policy makers to suspend interest rate hikes. The decline came despite one surprising cut in production through OPEC and its allies, including Russia. However, there is little evidence that Moscow has so far reduced its production despite the promise to do so.
The recent weakness in the oil price could reflect „ an excessive increase in real economic damping, especially given the financial interdependencies “, said Vishnu Varathan, Asia chief for economy and strategy at Mizuho Bank. There is now a risk of a further „ OPEC offer reaction or at least a buckling of the group in an attempt to support the prices “, he said.
According to data, speculators have expanded their bets against the oil markets significantly last week. Money managers saw the greatest increase in their short positions on the European diesel market and at the same time increased them to Brent as much as since March last year. The US crude oil and diesel markets also saw an increase just a few weeks after the OPEC + cut to contain the bear market.
Goldman Sachs has blamed the drop in oil prices over the past three weeks for a „ mostly macro-financial sale “, according to analysts like Daan Struyven. The bank assumes that the world market will tend to „ major deficits “ in the second half of the year, which speaks for higher prices. The prompt spread for the global reference variety Brent – the difference between the two closest contracts – was last 26 cents per barrel in backwardation. The value fluctuated between 37 cents and 15 cents per barrel in backwardation last week.
Why the oil price is currently showing a boost again
Last week Wednesday we reported on the sharp drop in oil prices. From the 12th. April to 3. May it was a $ 13 crash in WTI oil! And then came the turn. The price plunged really hard into the basement last Wednesday to almost $ 65. Let's ignore short-term exaggerations, then the WTI oil price last week saw Thursday at low levels around $ 67.60. Since then it has been going up to $ 72.52. In the chart we can see the course since the 11th. April.
Oil price rises noticeably – Correction of exaggeration
The oil futures market has been driven by fear of a recession in the United States for the past few weeks. As a result, there seems to have been a negative exaggeration in the oil price crash. If many important traders think, now having to take short wins with you – because it's time – then you like to see such a quick recovery in the oil price, because the traders can only smooth their shorts through purchases.
Recession in the United States?
Will the recession in the US – if it is actually rolling – significantly reduce the demand for oil, which could justify the already falling oil price? Well, on Friday at 2:30 p.m. they showed US labor market data for April: The US unemployment rate drops to 3.4% ( forecast 3.6% ). And: 253,000 new jobs were created in the USA in April ( Forecast + 180,000 ). So the US economy is running more robust than many analysts thought. Does that mean for the oil price? Possibly oil demand will continue to be at a higher level, which the futures market immediately priced in. Since Friday at 2:30 p.m. we have seen an increase in American WTI oil of $ 2.
Bloomberg statements
While fears of a US recession and bank collapse have recently unsettled the markets and pushed the oil price ( crude oil ) to its lowest level since the end of 2021, signals from physical demand indicate that at least part of the recent price weakness may have been exaggerated, Bloomberg said. On Monday, the dollar was weaker for the fifth day in a row, favoring the prospects for raw materials.
This week, traders will receive a number of forecasts about the development of the second half of the year. The OPEC publishes its monthly overview on Thursday, and before that US Energy Information Administration on Tuesday their short-term outlook. The world's largest oil producer, Saudi Aramco, will also announce its results.
The price of crude oil fell by around 11% this year as the most aggressive tightening campaign of the Federal Reserve Fears of an economic slowdown or recession in the United States have been fueling for a generation, although most investors now expect monetary policy makers to suspend interest rate hikes. The decline came despite one surprising cut in production through OPEC and its allies, including Russia. However, there is little evidence that Moscow has so far reduced its production despite the promise to do so.
The recent weakness in the oil price could reflect „ an excessive increase in real economic damping, especially given the financial interdependencies “, said Vishnu Varathan, Asia chief for economy and strategy at Mizuho Bank. There is now a risk of a further „ OPEC offer reaction or at least a buckling of the group in an attempt to support the prices “, he said.
According to data, speculators have expanded their bets against the oil markets significantly last week. Money managers saw the greatest increase in their short positions on the European diesel market and at the same time increased them to Brent as much as since March last year. The US crude oil and diesel markets also saw an increase just a few weeks after the OPEC + cut to contain the bear market.
Goldman Sachs has blamed the drop in oil prices over the past three weeks for a „ mostly macro-financial sale “, according to analysts like Daan Struyven. The bank assumes that the world market will tend to „ major deficits “ in the second half of the year, which speaks for higher prices. The prompt spread for the global reference variety Brent – the difference between the two closest contracts – was last 26 cents per barrel in backwardation. The value fluctuated between 37 cents and 15 cents per barrel in backwardation last week.
Comment:
Recession in the United States
Will the recession in the US – if it is actually rolling – significantly reduce the demand for oil, which could justify the already falling oil price? Well, on Friday at 2:30 p.m. they showed US labor market data for April: The US unemployment rate drops to 3.4% ( forecast 3.6% ). And: 253,000 new jobs were created in the USA in April ( Forecast + 180,000 ). So the US economy is running more robust than many analysts thought. Does that mean for the oil price? Possibly oil demand will continue to be at a higher level, which the futures market immediately priced in. Since Friday at 2:30 p.m. we have seen an increase in American WTI oil of $ 2.
Will the recession in the US – if it is actually rolling – significantly reduce the demand for oil, which could justify the already falling oil price? Well, on Friday at 2:30 p.m. they showed US labor market data for April: The US unemployment rate drops to 3.4% ( forecast 3.6% ). And: 253,000 new jobs were created in the USA in April ( Forecast + 180,000 ). So the US economy is running more robust than many analysts thought. Does that mean for the oil price? Possibly oil demand will continue to be at a higher level, which the futures market immediately priced in. Since Friday at 2:30 p.m. we have seen an increase in American WTI oil of $ 2.
Comment:
Inflation: Companies rely on the principle „ Price before quantity “
The current reporting season in the USA has confirmed again what has emerged everywhere in the past few months: the companies are relying on a new strategy. Instead of increasing sales figures, they are now increasingly relying on higher prices in order to achieve their sales and profit targets. This affects almost every industry. From car manufacturers to hoteliers, more and more companies are foregoing sales volumes in favor of higher prices. Sometimes they do this on purpose, sometimes they have no choice. So far, the strategy has worked, as the predominantly good quarterly figures show. Consumers still seem to ignore the high inflation ( ) and are still willing to pay the higher prices. This dynamic makes it harder for the Fed to fight inflation,and she could also be for others Central banks prove to be a problem.
Price increases as a driver of inflation
If one goes according to the statements in the recently published quarterly reports, the companies will not move away from the principle “ price before quantity ”. Already at the height of the pandemic, the strategy was the preferred choice in certain industries because the supply chains were significantly disrupted.
Example Ford: The carmaker maintains the higher sales prices, even if fewer cars roll off the assembly line. Example Marriott: The hotel operator increases room prices, especially for corporate customers. Southwest Airlines also relies on the principle: the airline achieves record sales in view of the limited flight capacity and keeps prices high. As the main vacation time is approaching, price power is not expected to fade, Bloomberg said.
With the US consumer price data for April, economists surveyed by Bloomberg expect inflation to remain unchanged at 5%. Before that, the inflation slowed down for nine months in a row. “ Inflation will prove to be far more persistent, pronounced and problematic for the US Federal Reserve in the summer than expected ”, says economist Samuel Rines, Managing Director at Corbu.
In the US automotive sector, new car prices are not far from their record values. The average monthly rate was $ 754 in March, almost one sixth of the average net income of US households. The surge in prices is likely to worsen as automobile manufacturers want to switch their fleets to more expensive electric models.
Inflation: pandemic aftermath
Already in the Corona pandemic, Ford and its competitors recognized that the serious chip bottlenecks also meant that you could make more profit with less produced cars.
For airlines, it is the lack of trained pilots and the backlog of new aircraft and spare parts that hinders sales. Southwest could have offered up to 8% more flight capacity in March if it had enough staff.
The capacity bottlenecks combined with the strong demand enable the industry to charge high prices, especially for transatlantic flights. The average price for a return flight to Europe is $ 1,032. This makes them 35% more expensive than last year and 24% more expensive than before the pandemic, as data from the Hopper rice search engine show. The figures suggest that international airfares will reach their highest level in five years this summer.
Companies support their profitability with price increases
The hotel industry has also adapted to the current consumer environment. According to market observer STR, US overnight prices rose by more than 10% in the first quarter, while occupancy only increased by around 6.
One reason for this is the changed demand mix: Leisure travelers have returned faster than customers than business travelers, which focuses demand on weekends. However, the owners have gotten used to operating hotels with lower occupancy but also lower cleaning costs.
“ The pandemic has lost a lot of staff, but has also gained a lot of pricing power ”, says Jan Freitag, director of the hotel analysis area at CoStar.
The producers of consumer bulk goods also put margin on sales: the Kimberly-Clark Corp. from Dallas, Texas, which produces Kleenex towels and toilet paper, increased prices in all categories by 10% in the last quarter. In view of this, sales decreased by 5. However, the gross margin rose to 33% from around 30% a year ago.
“ Therefore, when the price of toilet paper rises, you generally do not go to the toilet less often, do you? ” CEO Michael Hsu said at last month's press conference.
Rines notes with investors the expectation that companies will support their profitability with price increases. “ Companies do it everywhere, that's clear to see ”, he says. “ And if companies can't do it, they will be put under pressure. ” On the other hand, there is a risk of being attacked by consumers or politics.
Diana Gomes of Bloomberg Intelligence still sees the gross margin of the consumer goods companies she observes below the 2019 level. This suggests that the price increases so far only offset the increases in raw material and supply chain costs.
With a view to the fight against inflation, prices for travel and hotel accommodation for the Fed represent the biggest problem.
The current reporting season in the USA has confirmed again what has emerged everywhere in the past few months: the companies are relying on a new strategy. Instead of increasing sales figures, they are now increasingly relying on higher prices in order to achieve their sales and profit targets. This affects almost every industry. From car manufacturers to hoteliers, more and more companies are foregoing sales volumes in favor of higher prices. Sometimes they do this on purpose, sometimes they have no choice. So far, the strategy has worked, as the predominantly good quarterly figures show. Consumers still seem to ignore the high inflation ( ) and are still willing to pay the higher prices. This dynamic makes it harder for the Fed to fight inflation,and she could also be for others Central banks prove to be a problem.
Price increases as a driver of inflation
If one goes according to the statements in the recently published quarterly reports, the companies will not move away from the principle “ price before quantity ”. Already at the height of the pandemic, the strategy was the preferred choice in certain industries because the supply chains were significantly disrupted.
Example Ford: The carmaker maintains the higher sales prices, even if fewer cars roll off the assembly line. Example Marriott: The hotel operator increases room prices, especially for corporate customers. Southwest Airlines also relies on the principle: the airline achieves record sales in view of the limited flight capacity and keeps prices high. As the main vacation time is approaching, price power is not expected to fade, Bloomberg said.
With the US consumer price data for April, economists surveyed by Bloomberg expect inflation to remain unchanged at 5%. Before that, the inflation slowed down for nine months in a row. “ Inflation will prove to be far more persistent, pronounced and problematic for the US Federal Reserve in the summer than expected ”, says economist Samuel Rines, Managing Director at Corbu.
In the US automotive sector, new car prices are not far from their record values. The average monthly rate was $ 754 in March, almost one sixth of the average net income of US households. The surge in prices is likely to worsen as automobile manufacturers want to switch their fleets to more expensive electric models.
Inflation: pandemic aftermath
Already in the Corona pandemic, Ford and its competitors recognized that the serious chip bottlenecks also meant that you could make more profit with less produced cars.
For airlines, it is the lack of trained pilots and the backlog of new aircraft and spare parts that hinders sales. Southwest could have offered up to 8% more flight capacity in March if it had enough staff.
The capacity bottlenecks combined with the strong demand enable the industry to charge high prices, especially for transatlantic flights. The average price for a return flight to Europe is $ 1,032. This makes them 35% more expensive than last year and 24% more expensive than before the pandemic, as data from the Hopper rice search engine show. The figures suggest that international airfares will reach their highest level in five years this summer.
Companies support their profitability with price increases
The hotel industry has also adapted to the current consumer environment. According to market observer STR, US overnight prices rose by more than 10% in the first quarter, while occupancy only increased by around 6.
One reason for this is the changed demand mix: Leisure travelers have returned faster than customers than business travelers, which focuses demand on weekends. However, the owners have gotten used to operating hotels with lower occupancy but also lower cleaning costs.
“ The pandemic has lost a lot of staff, but has also gained a lot of pricing power ”, says Jan Freitag, director of the hotel analysis area at CoStar.
The producers of consumer bulk goods also put margin on sales: the Kimberly-Clark Corp. from Dallas, Texas, which produces Kleenex towels and toilet paper, increased prices in all categories by 10% in the last quarter. In view of this, sales decreased by 5. However, the gross margin rose to 33% from around 30% a year ago.
“ Therefore, when the price of toilet paper rises, you generally do not go to the toilet less often, do you? ” CEO Michael Hsu said at last month's press conference.
Rines notes with investors the expectation that companies will support their profitability with price increases. “ Companies do it everywhere, that's clear to see ”, he says. “ And if companies can't do it, they will be put under pressure. ” On the other hand, there is a risk of being attacked by consumers or politics.
Diana Gomes of Bloomberg Intelligence still sees the gross margin of the consumer goods companies she observes below the 2019 level. This suggests that the price increases so far only offset the increases in raw material and supply chain costs.
With a view to the fight against inflation, prices for travel and hotel accommodation for the Fed represent the biggest problem.
Comment:
Selling Pressure,Weakenning of UsDollar, thats good for Euro. Strong Euro is GOOD,no VERY GOOD for SP500;NASDAQ;DOW JONES; GOLD;BITCOIN;CRYPTOS: Everything against Dollar.
Look also my NVIDIA Forecast Chart performed: Nailed it! Weak US DOllar also good for Tech Stocks, Bio Pharma and Tech have Highly positive correltions with Bitcoin and Ethereum, and vice versa. NVIDIA : Top Performer
Friday is the Big Day of the Week: aND IT WILL BE VERY BUISY. RGHT AFTER THE bELL PMI and Inflation DATA!
Look also my NVIDIA Forecast Chart performed: Nailed it! Weak US DOllar also good for Tech Stocks, Bio Pharma and Tech have Highly positive correltions with Bitcoin and Ethereum, and vice versa. NVIDIA : Top Performer
Friday is the Big Day of the Week: aND IT WILL BE VERY BUISY. RGHT AFTER THE bELL PMI and Inflation DATA!
Comment:
Market UpDATES:
NASDQ100 US100 and Indices Sky Rocketing after FED pivot reates cooling
Nasdaq breaking 14055 easily as forecasted in my analysis : Next Target 14350
NVIDAI Sky ROCKETING(Watch als my other Forecasts USD/US100/USDJPY/GOLD/EURO- Related Markets)
Godl Found More Buyers on support.More Bullish Delat coming in nEXT TO 2000USD)
Medium-term price action on the daily chart exhibits scope to extend losses. The longer-term ascending channel is interesting (drawn from $1,641 and $1,959). Note that price action FAILED to touch gloves with the upper boundary in recent trading, pencilling in highs just ahead of the all-time high of $2,075.
Investment Sentiment rising higher from Lows:More Bulls
The Key Fed Inflation Rate Is Cooling At Pivotal Time For The S&P 500
EURO/USD Taking Profits +More Bulls Accumulation and Buying Pressure /Support 1,4075
NASDQ100 US100 and Indices Sky Rocketing after FED pivot reates cooling
Nasdaq breaking 14055 easily as forecasted in my analysis : Next Target 14350
NVIDAI Sky ROCKETING(Watch als my other Forecasts USD/US100/USDJPY/GOLD/EURO- Related Markets)
Godl Found More Buyers on support.More Bullish Delat coming in nEXT TO 2000USD)
Medium-term price action on the daily chart exhibits scope to extend losses. The longer-term ascending channel is interesting (drawn from $1,641 and $1,959). Note that price action FAILED to touch gloves with the upper boundary in recent trading, pencilling in highs just ahead of the all-time high of $2,075.
Investment Sentiment rising higher from Lows:More Bulls
The Key Fed Inflation Rate Is Cooling At Pivotal Time For The S&P 500
EURO/USD Taking Profits +More Bulls Accumulation and Buying Pressure /Support 1,4075
Comment:
Biden and House Speaker McCarthy reached an agreement on Saturday and the House vote is expected to take place on Wednesday. However, several Republicans have stated that they will not vote in favor of it. Most Ai stocks were still up after Nvidia rose as much as 4% earlier in the session, briefly hitting a $1 trillion market cap. Tesla also held gains after Elon Musk told Chinese foreign minister Qin Gang that he was willing to expand business in the country. On the other hand, energy stocks were among the worst performers dragged down by a 4% decline in oil prices.
Comment:
The Fed meets next week and expectations of another rate increase are rising, particularly given the growing hopes the U.S. economy is headed for a 'soft landing' after Congress's approval last week of a debt ceiling deal that averts U.S. default.
The Fed enters its traditional blackout period this week, but there is more data to digest, including the ISM services PMI later Monday, which is expected to point to a still solid rate of expansion.
The Fed enters its traditional blackout period this week, but there is more data to digest, including the ISM services PMI later Monday, which is expected to point to a still solid rate of expansion.
Comment:
DXY Falls after Weekly Claims
The dollar index dropped to as low as 103.58 on Thursday after higher-than-anticipated weekly claims reduced expectations of an imminent interest rate hike by the Federal Reserve. Market participants anticipate that the Federal Reserve will temporarily halt its cycle of interest rate increases before resuming them in July, but unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada have increased the likelihood of a Federal Reserve rate hike already next week. Nevertheless, the Federal Reserve's decision could be influenced by the release of May's consumer inflation data, scheduled for a day before the central bank's meeting, which is projected to indicate a 0.3% increase in prices.
Initial Jobless Claims Jump to 2021-Highs
The number of Americans filing for unemployment benefits jumped to 261K in the week ended June 3rd 2023, the highest figure since October 2021, and above market forecasts of 235K. Figures for the previous week were revised slightly higher to 233K from an initial 232K. It marks a third consecutive week of increases in the number of initial jobless claims, in a sign the labour market strenght may be fading. The 4-week moving average which removes week-to-week volatility was 237.25K, an increase of 7.5K from the previous week. Based on unadjusted data, the largest increases in initial claims were in Ohio (6.345K), California (5.173K), and Minnesota (2.746K), while the largest decreases were in Connecticut (-2.35K) and NY (-1.243K). Meanwhile, continuing claims fell to 1757K from 1794K, below forecasts of 1800K.
The dollar index dropped to as low as 103.58 on Thursday after higher-than-anticipated weekly claims reduced expectations of an imminent interest rate hike by the Federal Reserve. Market participants anticipate that the Federal Reserve will temporarily halt its cycle of interest rate increases before resuming them in July, but unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada have increased the likelihood of a Federal Reserve rate hike already next week. Nevertheless, the Federal Reserve's decision could be influenced by the release of May's consumer inflation data, scheduled for a day before the central bank's meeting, which is projected to indicate a 0.3% increase in prices.
Initial Jobless Claims Jump to 2021-Highs
The number of Americans filing for unemployment benefits jumped to 261K in the week ended June 3rd 2023, the highest figure since October 2021, and above market forecasts of 235K. Figures for the previous week were revised slightly higher to 233K from an initial 232K. It marks a third consecutive week of increases in the number of initial jobless claims, in a sign the labour market strenght may be fading. The 4-week moving average which removes week-to-week volatility was 237.25K, an increase of 7.5K from the previous week. Based on unadjusted data, the largest increases in initial claims were in Ohio (6.345K), California (5.173K), and Minnesota (2.746K), while the largest decreases were in Connecticut (-2.35K) and NY (-1.243K). Meanwhile, continuing claims fell to 1757K from 1794K, below forecasts of 1800K.
Comment:
Trade is open
Total consumer credit in the US rose $26.51 billion in March of 2023, after an upwardly revised $15 billion increase in the previous month and well above market expectations of a $16.5 billion rise. On a seasonally adjusted annual basis, consumer credit went up by 6.6 percent in March after a 3.7 percent gain in the prior month. Revolving credit, like credit cards, was up 17.3 percent, compared to a 5.7 percent rise in the prior month. Nonrevolving credit, typically auto and student loans, increased by 3 percent, following a 3.1 percent gain in the prior month.