Oil Falls 2% on Risk Aversion, Dollar Strength

Brent crude fell $1.42, or 1.9%, to settle at $73.92 a barrel after sinking to a session low of $73.52. U.S. West Texas Intermediate (WTI) declined $1.68, or 2.3%, to end at $70.29 after falling to as low as $69.86.

The dollar, seen as a safe haven, rose as worries about Chinese property developer Evergrande’s solvency spooked equity markets and investors braced for the Federal Reserve to take another step toward tapering this week.

“As the U.S. dollar is usually a safe haven, its exchange rate against other currencies strengthens, a development that supplements the risk aversion environment and affects commodity prices, especially oil,” Rystad Energy’s oil markets analyst Nishant Bhushan said.

“Oil gets more expensive for non-dollar markets and prices get a hit as a result, a bearish move backed by the stock market itself in an environment of risk aversion.”

Still, oil drew some support from signs that some U.S. Gulf output will stay offline for months due to storm damage.

Brent has gained 43% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, and some recovery in demand after last year’s pandemic-induced collapse.

Losses on Monday were limited due to supply shutdowns in the U.S. Gulf of Mexico due to two recent hurricanes. As of Friday producing companies had just 23% of crude production offline, or 422,078 barrels per day.

Crude pared its decline on Monday after Royal Dutch Shell said it expects an installation in the Gulf of Mexico to be offline for repairs until the end of 2021 due to damage from Hurricane Ida.

The facility serves as the transfer station for all the output from the company’s assets in the Mars corridor of the Mississippi Canyon area to onshore crude terminals.

Rystad Energy analyst Artem Abramov estimated the lost production will remove 200,000 to 250,000 barrels per day (bpd) of Gulf of Mexico oil supply for several months. The Gulf contributes about 16% of U.S. oil production, or 1.8 million bpd.

For a look at all of today’s economic events, check out our economic calendar.

(Reporing by Alex Lawler; Additional reporting by Sonali Paul in Melbourne, and Roslan Khasawneh and Koustav Samanta in Singapore; Editing by Marguerita Choy and David Gregorio)

World Shares Tumble as China Evergrande Contagion Fears Spread

MSCI’s gauge of stocks across the globe shed 2.09%, on pace for its biggest one-day fall since October 2020, as Wall Street’s major indexes sagged more than 2%.

Investors moved into safe havens, with U.S. Treasuries gaining in price, pulling down yields, and gold rising.

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China’s financial system if its debts are not stabilized.

“Investors are concerned that the Evergrande issue is going represent a domino,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Investors are tending to sell first and look into it to later.”

The Dow Jones Industrial Average fell 787.6 points, or 2.28%, to 33,797.28, the S&P 500 lost 101.41 points, or 2.29%, to 4,331.58 and the Nasdaq Composite dropped 408.25 points, or 2.71%, to 14,635.71.

Economically sensitive sectors, including financials and energy, were hit particularly hard.

The pan-European STOXX 600 index lost 1.67%, with mining stocks sliding.

The selloff on Monday has seen a cumulative $2.2 trillion of value wiped off the market capitalization of world equities from a record high of $97 trillion hit on Sept. 6, according to Refinitiv data.

Worries over Evergrande follow a pullback in equities recently as investors worry over the impact of coronavirus cases on the economy, and when central banks will ease back on monetary stimulus.

The U.S. Federal Reserve is due to meet on Tuesday and Wednesday as investors look for when it will begin pulling back on its bond purchases.

Investors were also keeping an eye on other central bank meetings spanning Brazil, Britain, Hungary, Indonesia, Japan, Norway, the Philippines, South Africa, Sweden, Switzerland, Taiwan and Turkey.

The dollar index rose 0.061%, with the euro unchanged at $1.1725.

The offshore Chinese yuan weakened versus the U.S. currency to its lowest level in nearly a month.

“We are seeing a classic flight to safety in the dollar until we get some sense of clarity on whether or not it is going to be an orderly or disorderly resolution to Evergrande,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, DC.

Benchmark 10-year notes last rose 22/32 in price to yield 1.2972%, from 1.37% late on Friday.

The iShares exchange-traded fund tracking high-yield corporate bonds edged down 0.5%.

Oil prices fell but drew support from signs that some U.S. Gulf output will stay offline for months due to storm damage.

U.S. crude fell 2.18% to $70.40 per barrel and Brent was at $73.99, down 1.79% on the day.

Spot gold added 0.4% to $1,761.29 an ounce, rising off of a one-month low.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Lewis Krauskopf in New York and Tom Arnold in London; Additional reporting by Anushka Trivedi in Bengaluru, Saikat Chatterjee in London, Karen Pierog and Chuck Mikolajczak in New York and Wayne Cole in Sydney; Graphic by Sujata Rao; Editing by Jane Merriman, Mark Potter and Jan Harvey)

Crude Oil Price Forecast – Crude Oil Markets Pull Back Towards 50 Day EMA

WTI Crude Oil

The West Texas Intermediate Crude Oil market has fallen a bit during the course of the trading session on Monday, to reach down towards the 50 day EMA. If we can break above the highs of the trading session, it is very likely that we continue to see the momentum to the upside. At that point, the market is likely to test the $74 level, possibly even the $75 level given enough time.

To the downside, the 50 day EMA and the downtrend line both offer a significant amount of support, so there is no way that I can justify shorting this market until we break down below the $67.50 level underneath, which had been a major support level.

Crude Oil Video 21.09.21

Brent

Brent markets also fell initially during the trading session but have turned around to show signs of life again. Because of this, I think that the buyers will continue to jump into this market to pick up any signs of value. For whatever reason, traders still believe that there is going to be a huge move into the energy sector, and at this point in time it is very unlikely to see a massive selloff. At this point, I think we probably go looking towards the $77.50 level over the next couple of days but pay close attention to the risk appetite out there. That of course could have a major influence on where we go next. As long as we stay above the $70 level, it is likely that there will be plenty of buyers in this market to take advantage of “cheap oil.”

For a look at all of today’s economic events, check out our economic calendar.

Stocks Retreat Amid Global Sell-Off

All Eyes On China

S&P 500 futures are under significant pressure in premarket trading as traders focus on the potential collapse of China Evergrande Group, which has amassed more than $300 billion in liabilities.

Fears of another financial crisis coming out of Asia pushed global indices towards multi-week lows, but it remains to be seen whether the impact of a potential Evergrande default will have widespread consequences.

Traders are also nervous ahead of the Fed meeting, although Fed Chair Jerome Powell will likely try to calm markets and reiterate his usual dovish message on September 22.

Global Rush To Safety

The yield of 10-year Treasuries has moved away from recent highs and is trying to settle below 1.30% as traders buy U.S. government bonds to protect themselves from the potential correction in riskier markets.

The U.S. dollar is also moving higher due to its safe-haven status. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is trying to settle above the resistance at 93.40. In case this attempt is successful, it will move towards yearly highs near 93.75 which may put more pressure on stocks.

Interestingly, gold is gaining ground despite strong dollar as falling yields and demand for safe-haven assets have provided sufficient support. In this environment, gold mining stocks may rebound from yearly lows.

WTI Oil Tries To Settle Below The $70 Level

WTI oil is currently trying to settle below the support at the psychologically important $70 level as traders fear that Evergrande’s financial problems may have a notable negative impact on China’s economy and cut demand for oil.

Most other commodities are also under pressure, and the market mood is very bearish today. Premarket trading indicates that oil-related stocks will find themselves under huge pressure at the beginning of today’s trading session so traders should be prepared for fast moves.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Outside Factors Encouraging Long Liquidation, Profit-Taking

U.S. West Texas Intermediate and International-benchmark Brent crude oil futures are trading lower early Monday, extending Friday’s losses amid a jump in the U.S. Dollar to a three-week high against a basket of major currencies and a potential increase in U.S. supply after a reported rise in the U.S. rig count.

At 11:11 GMT, December WTI crude oil is trading $69.96, down $1.42 or -1.99% and December Brent crude oil is at $73.33, down $1.23 or -1/65%.

Crude Pressured as US Dollar Catches Safety Bid

Dollar-denominated crude oil is getting hit by a sharply higher U.S. Dollar on Monday. The movement is being fueled by overseas activity in Asia. The offshore Chinese Yuan fell to a three-week low dragging commodities lower, while the safe-haven U.S. Dollar rose as worries about Chinese property developer Evergrande’s solvency spooked financial markets.

The drop in the Yuan came on the back of warnings from Chinese regulators that the Evergrande’s insolvency could spark broader risks in the country’s financial system if not stabilized.

Evergrande has been scrambling to raise funds to pay its many lenders, suppliers and investors. A deadline for the company to make an interest payment to creditors looms this week.

US Margin Call Selling Weighing on Crude Prices

U.S. stock futures began the week deeply in the red as investors continued to move to the sidelines in September amid several emerging risks for the market including the fear of contagion in the financial markets following the troubled China property market, an upcoming Federal Reserve meeting, Rising US. COVID cases, debt ceiling negotiations and a new tax bill.

The steep sell-off in stocks is likely triggering a series of margin calls which are forcing hedge funds to sell other assets like crude oil to raise the cash to meet their margin obligations. So far the selling in crude has been relatively light but could increase after the New York futures market opening.

Fear of Increased Supply

U.S. energy firms last week added oil and natural gas rigs for a second week in a row although the number of offshore units in the Gulf of Mexico remained unchanged after Hurricane Ida slammed into the coast over two weeks ago.

Fourteen offshore Gulf of Mexico rigs shut two weeks ago due to Ida remained inactive, energy services firm Baker Hughes Co said in its closely followed report on Friday. Last week, four of those offshore rigs returned to service. The oil and gas rig count, an early indicator of future output, rose nine to 512 in the week to September 17, its highest since April 2020, Baker Hughes said.

Daily Forecast

WTI and Brent crude oil futures are going through normal corrections with traders looking for a pullback into a value area after the market got a little overvalued last week. Long liquidation to meet margin calls in the stock market, fear of increased supply from the recovery in the Gulf and good old-fashioned profit-taking are behind the weakness. The longer-term supply/demand fundamentals remain intact. Prices are just cheaper than they were last week.

For a look at all of today’s economic events, check out our economic calendar.

Commodity Supercycle Sets New Record Highs – Where Next For Prices?

Commodities are currently on an unstoppable run with everything from the metals, energies to agriculture markets setting new record highs as the supercycle firmly gathers pace.

Last week, a wide number of commodities blasted through all-time highs.

Aluminium prices soared to 13-year highs. Nickel prices hit 7-year highs and Uranium prices surged to 9-year highs – surpassing a record 6-year high, set only a week ago.

The bullish momentum also split over into other commodities with Natural Gas rallying to a 7-year high. Sugar prices hitting 4-year highs and Lithium prices climbing to an all-time record high.

In total 27 Commodities ranging from the metals, energies to soft commodities have tallied up double to triple digit gains within the in the past year.

Uranium, Natural Gas and Lithium prices are up 219%, 240% and 215%, respectively.

But the best performing commodity, so far this year, is Crude Oil.

Crude Oil prices have quadrupled this year and are setting new record highs almost every month. Crude Oil prices are currently up over 287% from their 2020 lows.

There are plenty of reasons why commodities are on the move, but the key driver is rapidly surging global inflation, tightening supply, logistical bottlenecks and booming demand across many highly essential commodities as a result of the COVID-19 pandemic.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Oil is Still Bullish as the Retracement is Underway

The POC zone 68.25-68.80 is the zone where the price might bounce. CAD is dropping and CAD is correlating to Oil. If we see a retracement there, watch for a move towards 70.80 and 73.79. If bulls want to stay in control the price needs to stay above 67.00. Buying the dips is still the strategy to go with.

Cheers and safe trading,

Nenad

 

The Week Ahead – Central Banks back in Focus with the BoE and the FED in Action

On the Macro

It’s a quiet week ahead on the economic calendar, with 37 stats in focus in the week ending 17th September. In the week prior, 62 stats had also been in focus.

For the Dollar:

Prelim private sector PMIs for September will be in focus on Thursday.

Expect the services PMI to be the key stat of the week.

Other stats include housing sector data that will likely have a muted impact on the Dollar and the broader market.

The main event of the week, however, is the FOMC monetary policy decision on Wednesday.

With the markets expecting the FED to stand pat, the economic and interest rate projections and press conference will be pivotal. FED Chair Powell prepped the markets for the tapering to begin this year. The markets are not expecting any hint of a shift in policy on interest rates, however…

In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195.

For the EUR:

It’s a relatively busy week on the economic data front.

Prelim September private sector PMIs for France, Germany, and the Eurozone will draw plenty of interest on Thursday.

While Germany’s manufacturing PMI is key, expect influence from the entire data set. Market concerns over the economic recovery have tested support for riskier assets. Softer PMI numbers would test EUR support on the day.

For the week, the EUR fell by 0.75% to $1.1725.

For the Pound:

It’s a relatively busy week ahead on the economic calendar.

On the economic data front, CBI Industrial Trend Orders and prelim private sector PMIs are due out.

Expect the services PMI for September to be the key stat on Thursday.

While the stats will influence, the BoE’s monetary policy decision on Thursday will be the main event.

Persistent inflationary pressure has raised the prospects of a sooner rather than later move by the BoE. Weak retail sales figures have made things less clear, however.

Expect any dissent to drive the Pound towards $1.40 levels.

The Pound ended the week down by 0.71% to $1.3741.

For the Loonie:

It’s another quiet week ahead on the economic calendar.

Early in the week, house price figures for August are due out. The numbers are not expected to have a material impact on the Loonie, however.

Retail sales figures for July, due out on Thursday, will influence, however. Another sharp increase in spending would deliver the Loonie with much-needed support.

The Loonie ended the week down 0.57% to C$1.2764 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

There are no major stats to provide the Aussie Dollar with direction.

While there are no major stats, the RBA monetary policy meeting minutes on Tuesday will influence. The markets will be looking for forward guidance following the latest lockdown measures.

The Aussie Dollar ended the week down by 1.05% to $0.7279.

For the Kiwi Dollar:

It’s another quiet week ahead.

Early in the week, consumer sentiment figures for the 3rd quarter will be in focus.

Trade data, due out on Friday, will be the key numbers for the week, however.

Away from the economic calendar, however, COVID-19 news updates will also be key.

The Kiwi Dollar ended the week down by 1.03% to $0.7040.

For the Japanese Yen:

It’s a relatively busy week on the economic calendar.

Inflation and prelim private sector PMIs are due out on Friday. We don’t expect the numbers to influence the Yen, however.

On the monetary policy front, the BoJ is in action on Wednesday. We aren’t expecting any surprises, however, as the Delta variant continues to deliver economic uncertainty.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar.

Out of China

There are also no major stats due out of China for the markets to consider, with the Chinese markets closed early in the week.

On the monetary policy front, the PBoC is in action. We don’t expect any changes to the Loan Prime Rates, however.

The Chinese Yuan ended the week down by 0.34% to CNY6.4661 against the U.S Dollar.

Geo-Politics

Iran, China, and Russia remain the main areas of interest for the markets. News updates from the Middle East, in particular, will need continued monitoring following recent events in Afghanistan.

The Weekly Wrap – Economic Data and Policy Jitters Delivered a Boost for the Greenback

The Stats

It was a busier week on the economic calendar, in the week ending 17th September.

A total of 61 stats were monitored, which was up from 42 stats in the week prior.

Of the 61 stats, 21 came in ahead forecasts, with 27 economic indicators coming up short of forecasts. There were 13 stats that were in line with forecasts in the week.

Looking at the numbers, 29 of the stats reflected an upward trend from previous figures. Of the remaining 32 stats, 30 reflected a deterioration from previous.

For the Greenback, upbeat economic data and sentiment towards monetary policy delivered support in the week. In the week ending 17th September, the Dollar Spot Index rose by 0.66% to 93.195. In the previous week, the Dollar had risen by 0.59% to 92.582.

Out of the U.S

Early in the week, inflation figures were in focus.

In August, the annual rate of core inflation softened from 4.3% to 4.0% versus a forecasted 4.2%. While softer than expected, 4% continued to sit well above the FED’s 2% target, leaving tapering on the table.

Mid-week, industrial production and NY Empire State manufacturing figures were market positive.

On Thursday, retail sales, Philly FED Manufacturing PMI, and jobless claims figures were of greater interest, however.

In August, retail sales increased by 0.7% versus a forecasted 0.2% decline. Core retail sales jumped by 1.8% versus a 0.1% decline. In July retail sales had fallen by 1.1% and core retail sales by 0.4%.

Manufacturing numbers were also upbeat, with the Philly FED Manufacturing PMI increasing from 19.4 to 30.7 in September.

Jobless claims figures failed to impress, however, with sub-300k remaining elusive. In the week ending 10th September, initial jobless claims rose from 312k to 332k. Economists had forecast an increase to 330k.

At the end of the week, consumer sentiment improved, albeit moderately. In September, the Michigan Consumer Sentiment Index rose from 70.3 to 71.0, falling short of a forecasted 72.0.

Out of the UK

It was also a busy week. Employment, inflation, and retail sales figures were in focus. The stats were skewed to the positive.

In August, claimant counts fell by a further 58.6k after having fallen by 48.9k in July. In July, the unemployment rate fell from 4.7% to 4.6%.

The UK’s annual rate of inflation accelerated from 2.0% to 3.25 in August, also delivering Pound support.

At the end of the week, retail sales disappointed, however. Month-on-month, core retail sales fell by 1.2% in August, following a 3.2% slide in July. Retail sales fell by 0.9% after having fallen by 2.8% in July. Economists had forecast a pickup in spending.

In the week, the Pound fell by 0.71% to end the week at $1.3741. In the week prior, the Pound had fallen by 0.23% to $1.3839.

The FTSE100 ended the week down by 0.93%, following a 1.53% loss from the previous week.

Out of the Eurozone

Economic data included wage growth, industrial production, trade, and finalized inflation figures for the Eurozone.

Finalized inflation figures for Spain, France, and Italy were also out but had a muted impact on the EUR.

In the 2nd quarter, wage fell by 0.4%, year-on-year, partially reversing a 2.1% increase recorded in the previous quarter.

Industrial production and trade data were positive, however.

Production increased by 1.5%, reversing a 0.1% fall from June, with the Eurozone’s trade surplus widening from €17.7bn to €20.7bn.

At the end of the week, finalized inflation figures for the Eurozone were in line with prelim figures. The Eurozone’s annual rate of inflation accelerated from 2.2% to 3.0% in August.

For the week, the EUR fell by 0.75% to $1.1725. In the week prior, the EUR had fallen by 0.56% to $1.1814.

The CAC40 slid by 1.40%, with the DAX30 and the EuroStoxx600 ending the week with losses of 0.77% and 0.96% respectively.

For the Loonie

Economic data included manufacturing sales, inflation, and wholesale sales figures.

The stats were mixed in the week.

In July, both manufacturing sales and wholesale sales disappointed with falls of 1.5% and 2.1% respectively.

Providing support, however, was a pickup in the annual rate of inflation from 3.3% to 3.5%.

The pickup in inflationary pressure and rising oil prices were not enough to support the Loonie against the Greenback.

In the week ending 17th September, the Loonie fell by 0.57% to C$1.2764. In the week prior, the Loonie had fallen by 1.34% to C$1.2692.

Elsewhere

It was another bearish week for the Aussie Dollar and the Kiwi Dollar.

The Aussie Dollar fell by 1.05% to $0.7279, with the Kiwi Dollar ending the week down by 1.03% to $0.7040.

For the Aussie Dollar

Business and consumer confidence figures were in focus in the 1st half of the week.

In spite of the latest lockdown measures, the stats were skewed to the positive.

The NAB Business Confidence Index rose from -8 to -5 in August.

More significantly, the Westpac Consumer Sentiment Index increased by 2.0% in September. The index had fallen by 4.4% in August.

On Thursday, employment figures disappointed, however.

In August, full employment fell by 68k following a 4.2k decline in July. Employment tumbled by 146.3k, however, versus a forecasted 90.0k decline. In July, employment had risen by 2.2k.

According to the ABS,

  • The unemployment rate fell from 4.6% to 4.5%, with the participation rate declining from 66.0% to 65.2%.
  • Year-on-year, the number of unemployed was down by 298,000.

For the Kiwi Dollar

It was also a mixed week on the economic data front.

2nd quarter GDP numbers impressed, with the NZ economy expanding by 2.8%, quarter-on-quarter. The economy had expanded by a more modest 1.4% in the previous quarter.

On the negative, however, was a slide in the Business PMI from 62.6 to 40.1 in August. The figures reflected the impact of the latest lockdown measures on production, justifying the RBNZ’s decision to leave the cash rate unchanged.

For the Japanese Yen

It was a relatively quiet week, with the numbers skewed to the negative.

According to finalized figures, industrial production fell by 1.5% in July. While in line with prelim figures, this was a partial reversal of a 6.5% jump from June.

In August, Japan’s trade balance fell from a ¥439.4bn surplus to a ¥635.4bn deficit. Exports rose by 26.2%, year-on-year, after having been up by 37% in July.

The Japanese Yen rose by 0.01% to ¥109.93 against the U.S Dollar. In the week prior, the Yen had fallen by 0.21% to ¥109.94.

Out of China

Fixed asset investment and industrial production figures were in focus mid-week.

There were yet more disappointing numbers from China for the markets to consider.

In August, fixed asset investment increased by 8.9%, year-on-year. This was softer than a 10.3% increase in July.

More significantly, industrial production was up by 5.3% in August versus 6.4% in July.

In the week ending 17th September, the Chinese Yuan fell by 0.34% to CNY6.4661. In the week prior, the Yuan had ended the week up by 0.18% to CNY6.4443.

The CSI300 and the Hang Seng ended the week down by 3.14% and by 4.90% respectively.

Crude Oil Price Update – Trader Reaction to $69.72 Minor Pivot Will Determine Near-Term Direction

U.S. West Texas Intermediate crude oil futures are edging lower late Friday, while trading inside Wednesday’s wide range for a second session, indicating investor indecision and impending volatility. Nonetheless, the market remained in a position to post a weekly gain.

The catalyst behind the selling pressure is renewed supply as energy companies in the U.S. Gulf of Mexico started production after back-to-back hurricanes in the region shut output.

At 19:43 GMT, December WTI crude oil futures are trading $71.42, down $0.49 or -0.68%.

Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production. Restarts continued with about 28% of U.S. Gulf of Mexico crude output offline, Reuters reported on Thursday.

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the July 6 main top at $72.61 will reaffirm the uptrend. A move through $67.04 will change the main trend to down.

The minor range is $67.04 to $72.39. Its 50% level at $69.72 is the next downside target.

The short-term range is $61.11 to $72.39. If the main trend changes to down then its retracement zone at $66.75 to $65.42 will become the primary downside target area. Look for a technical bounce on the first test of this zone.

Short-Term Outlook

The direction of the December WTI crude oil market into the close on Friday will be determined by trader reaction to $71.21.

Bullish Scenario

A sustained move over $71.21 will indicate the presence of buyers. If this move creates enough upside momentum into the close then look for a possible test of $72.39 – $72.61.

Bearish Scenario

A sustained move under $71.21 into the close will signal the presence of sellers. This will likely lead to a test of the nearest pivot at $69.72 on Monday.

For a look at all of today’s economic events, check out our economic calendar.

Oil Falls as Storm-Hit U.S. Supply Trickles Back Into Market

Brent crude futures fell 33 cents to settle at $75.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 64 cents to settle at $71.97 a barrel. For the week, Brent was up 3.3% and U.S. crude was up 3.2%, supported by tight supplies due to the hurricane outages.

Friday’s slump followed five straight sessions of rises for Brent. On Wednesday, Brent hit its highest since late July, and U.S. crude hit its highest since early August.

“The reason oil prices reached such highs in the last few days was clearly supply disruptions and drawdowns in inventories, so now that U.S. oil production is returning, oil as expected trades lower,” said Nishant Bhushan, Rystad Energy’s oil markets analyst.

Gulf Coast crude oil exports are flowing again after hurricanes Nicholas and Ida took out 26 million barrels of offshore production. Restarts continued with about 28% of U.S. Gulf of Mexico crude output offline, Reuters reported on Thursday.

U.S. energy firms this week added oil and natural gas rigs for a second week in a row although the number of offshore units in the Gulf of Mexico remained unchanged after Hurricane Ida slammed into the coast over two weeks ago.

Fourteen offshore Gulf of Mexico rigs shut two weeks ago due to Ida remained shut, energy services firm Baker Hughes Co said. Last week, four offshore rigs returned to service.

The oil and gas rig count, an early indicator of future output, rose nine to 512 in the week to Sept. 17, its highest since April 2020, Baker Hughes said.

The dollar climbed to a multi-week high on Friday, making dollar-denominated crude more expensive for those using other currencies. The dollar got a boost from better-than-expected U.S. retail sales data on Thursday.

U.S. consumer sentiment steadied in early September after plunging the month before to its lowest level in nearly a decade, but consumers remain worried about inflation, a survey showed on Friday.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Stephanie Kelly in New York; additional reporting by Julia Payne in London, Sonali Paul in Melbourne and Roslan Khasawneh in SingaporeEditing by David Goodman, Louise Heavens and David Gregorio)

Crude Oil Weekly Price Forecast – Crude Oil Markets Continue Bullish Pressure

WTI Crude Oil

The West Texas Intermediate Crude Oil market has broken above the $71 level to show signs of life again, breaking above a short-term downtrend line. This is a continuation of the move to the upside, as it looks like we are ready to go higher. To the downside, the $70 level underneath would be supportive, and with that being the case I think we are looking at a “buy on the dips” type of scenario, with the 50 day EMA underneath at the $61.48 level has been a massive support level. That being said, I think that it is going to find plenty of support multiple times before we get anywhere near there, especially if we do see a turnaround in the US dollar and it is starting to fall

WTI Oil Video 20.09.21

Brent

Brent markets rallied significantly during the course of the week to break above the $75 level, which of course is a large, round, psychologically significant figure. Having said that, the market is likely to continue to go higher, perhaps reaching towards the $77.50 level. This is a market that has been bullish for a while, and with that being the case I think short-term pullbacks will continue to offer an opportunity to get long.

I think at this point in time we are more likely than not to go looking towards the recent highs, perhaps reaching towards the $80 level. This is a scenario that I think continues to see plenty of value hunters jumping into it, as we are starting to see demand for crude oil due to the economy reopening, and for that matter simple heating.

For a look at all of today’s economic events, check out our economic calendar.

Crude Oil Price Forecast – Crude Oil Continues to Show Buyers on Dips

WTI Crude Oil

The West Texas Intermediate Crude Oil market has pulled back a bit during the course of the trading session on Friday but continues to find buyers on dips. The market found the $72 region as supportive enough to turn things around, as we continue to see a lot of buyers at the first signs of value. If we can break above the top of the candlestick, then it is possible that the market could go looking towards the $74 level, and then eventually the $75 level.

We have recently seen momentum jumping into the market, especially with the 50 day EMA curling higher. In general, this is a market that I think continues to see demand come into the picture as OPEC suggests that demand will pick up going forward.

Crude Oil Video 20.09.21

Brent

Brent markets have also pulled back just a bit but turned around to show signs of life again. Ultimately, this is a market that is trying to find its way towards the $80 level, but it may take a while to get there. The $72 level underneath will offer support, as it is the downtrend line and of course the 50 day EMA is ready to break above there. All things been equal, this is a very bullish market and I think it is only a matter of time before we go much higher. With that being the case, the market is likely to see plenty of value hunters given enough time, even though the US dollar has continued to strengthen. At this point, inflation is a potential driver of the market as well.

For a look at all of today’s economic events, check out our economic calendar.

Stocks Remain Under Pressure Ahead Of The Weekend

Stocks Set To Open Lower

S&P 500 futures are losing ground in premarket trading as traders remain cautious ahead of Fed Interest Rate Decision which will be released on September 22.

Yesterday, Retail Sales and Continuing Jobless Claims reports exceeded analyst expectations and raised worries that Fed will soon announce the reduction of its asset purchase program.

Today, traders will have a chance to take a look at Michigan Consumer Sentiment report for September. Analysts expect that Consumer Sentiment increased from 70.3 in August to 72 in September.

Gold Tries To Rebound After Yesterday’s Sell-Off

Gold failed to settle below the support level at $1750 and is trying to rebound while the U.S. dollar is losing some ground against a broad basket of currencies.

Yesterday, gold gained strong downside momentum after it managed to get below the support at $1775. Not surprisingly, gold mining stocks found themselves under strong pressure and moved closer to yearly lows.

It remains to be seen whether traders will be ready to buy gold mining stocks today as the current rebound in the gold market is not strong, and gold may lose momentum in case U.S. dollar gains some ground or Treasury yields move closer to recent highs.

WTI Oil Failed To Settle Below The $72 Level

WTI oil has recently made another attempt to settle below the $72 level but failed to develop sufficient downside momentum. Oil found itself under pressure after the recent rally, but it looks that many traders were ready to buy oil on pullback.

The number of new daily coronavirus cases in the world is trending down which is bullish for oil. In addition, U.S. domestic oil production has not fully recovered from hurricane-related damage. Recent spikes in natural gas prices in Europe have also boosted traders’ enthusiasm. In this environment, WTI oil has good chances to get back to recent highs.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – China, US Make Moves to Keep Refineries Operating During Recovery

Crude oil is currently hovering just below its multi-year high reached in July. Both international-benchmark Brent and U.S.-benchmark West Texas Intermediate were driven there this week by a combination of events including the slow restart of production at offshore installations caused by Hurricane Ida and the quick restart of refinery operations. Therein lies the problem with supply.

Refineries are drawing on whatever dwindling supply they can get their hands on to produce gasoline and distillates. But the inability to produce oil from offshore operations means supply is at extremely low levels.

How low is supply? Low enough to encourage both the U.S. and China to tap their strategic oil reserves to keep refiners operating.

These events have prompted the International Energy Agency (IEA) and the Organization of the Petroleum Exporting Countries (OPEC) to comment on these events in their monthly oil reports. These reports helped underpin prices this week.

“It is only by early 2022 that supply will be high enough to allow oil stocks to be replenished,” the Paris-based IEA said. “In the meantime, strategic oil stocks from the U.S. and China may go some way to help plug the gap.”

China, US Tap Strategic Reserves

In an effort to maintain supply levels high enough to keep refiners operating and to keep prices from rising too high, too fast, both China and the U.S. recently made moves to release supply from their strategic reserves.

China will make the first sale of oil from its strategic reserves on September 24 after announcing the historic move last week, an unprecedented intervention by the world’s top crude importer to lower prices, Bloomberg reported.

The initial auction will be for about 7.38 million barrels of crude, the National Food and Strategic Reserves Administration said in a statement late Tuesday. Grades include Qatar Marine, Forties, Oman, Murban and Upper Zakum, which are in tanks at Dalian and were put into storage last year, the agency said.

The Chinese agency said last week that it would tap its giant oil reserves to “ease the pressure of rising raw material prices.”

Additionally, earlier this month the Energy Department authorized loans of SPR crude to Exxon and Placid Refining Company LLC’s refineries in the Baton Rouge area totaling 3.3 million barrels to help them cope with the dearth of oil coming from the U.S. Gulf.

“The SPR’s ability to conduct exchanges is a critical tool available to refiners to strengthen the fuel supply chain and mitigate disruptions following emergencies, like Hurricane Ida,” the department said on its website after authorizing the additional loan to Exxon’s Baton Rouge refinery.

Exxon is transporting the oil to the 520,000 barrels per day refinery, “which will help us completely restore normal operations and continue providing fuel to the impacted area,” said Julie King, a company spokesperson. The plant resumed normal operations earlier in the day.

For a look at all of today’s economic events, check out our economic calendar.

U.S. Gulf Crude Oil Ramps Up After Hurricane Losses – Data

Hurricanes Ida and Nicholas damaged platforms, pipelines and processing hubs, shutting in most offshore production for weeks. Restarts continued on Thursday with about 28% of U.S. Gulf of Mexico crude output offline. Some vessels remained at sea waiting to load U.S. crude.

But of more than 50 tankers set to load U.S. crude for exports or to discharge imported oil in Texas and Louisiana through early October, the majority remained on track on Thursday, according to Refinitiv Eikon vessel tracking data. Just 22% were showing delays.

Some exporters of Mars crude, which is produced in the Gulf, have offered customers alternatives including switching to other crude grades, re-scheduling loadings or changing ports, traders involved in the sales said.

PRICES EASE

That strategy resulted in Mars prices easing in recent days. After spiking to a $1.50 per barrel premium above the U.S. WTI, the highest since January, Mars for October delivery slid to a 50-cents per barrel discount to the U.S. benchmark on Wednesday, the lowest in two weeks.

However, some analysts said Mars would be the last grade to come back to the export market because of damage to a key offshore transfer hub. Royal Dutch Shell, which declared force majeure on contracts, continues to assess damage to the West Delta-143 platform, which controls the flow of oil from three large fields.

Some tankers that were scheduled to load at Louisiana ports in the last three weeks have diverted to Galveston Offshore Lightering Area (GOLA) and Corpus Christi, Texas, for loadings. Those ports are fully working after brief suspensions due to Hurricane Nicholas this week.

Corpus Christi exported 1.69 million bpd of crude in August, up about 100,000 bpd from July, the port said. Export data for September was not available.

SHIPS AT SEA

In contrast, the largest privately-owned U.S. export terminal, the Louisiana Offshore oil Port (LOOP), has yet to receive its first vessel since Ida, Refinitiv data showed. Its storage caverns were only 26% utilized in August, the company said.

LOOP oil exports “show few signs of a pickup following Hurricane Ida,” said Reid I’Anson, senior commodity analyst at data provider Kpler. The port’s August departures included a single vessel taking 2 million barrels of Mars crude, “the lowest absolute total leaving LOOP in any given month since February,” he said.

Weekly U.S. crude exports in September have slipped to between 2.34 million barrels per day (bpd) and 2.62 million bpd, according to preliminary data from the U.S. Energy Information Administration, from 3 million bpd in late August.

REFINERS GET SUPPLIES

With about 500,000 barrels per day (bpd) of refining capacity offline since Ida, most Gulf Coast refineries have been able to meet demand with crude loans from the U.S. Strategic Petroleum Reserve and arriving supplies.

The Aframax tanker Crude Centurion, carrying 500,000 barrels of Mexican Maya crude, on Thursday was docked and discharging at a Phillips 66 refinery in Belle Chasse, Louisiana, according to Refinitiv data.

U.S. regulators are still reviewing offshore platforms and approving resumption of production. Of the 288 platforms evacuated during Ida, 42 remained unoccupied on Thursday, the Bureau of Safety and Environmental Enforcement (BSEE) said.

“Facilities sustaining damage may take longer to bring back online,” BSEE said in a written statement to Reuters.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Marianna Parraga in Houston and Devika Krishna Kumar in New York, additional reporting by Liz Hampton in Denver; Editing by David Gregorio)

World Shares Slide on Wall Street Sell-Off, China Worries

International investors that have been piling into China in recent years are now bracing for one of its great falls as the troubles of over-indebted property giant China Evergrande come to a head.

The developer’s woes have been snowballing since May. Dwindling resources set against 2 trillion yuan ($305 billion) of liabilities have wiped nearly 80% off its stock and bond prices, and an $80 million bond coupon payment now looms next week.

Hong Kong’s Hang Seng index dropped to its lowest level so far this year.

A report from the U.S. Commerce Department showed retail sales unexpectedly rose in August, indicating America’s economic recovery is strengthening on positive trends in consumer spending. The strong data lifted the dollar and pushed up treasury yields, and sent safe-haven gold down nearly 3%.

However, the U.S. labor market remains under pressure, with initial jobless claims rising by slightly more than expected last week.

Losses on Wall Street were dominated by technology and energy stocks as oil retreated from recent highs now that the threat to U.S. Gulf production from Hurricane Nicholas has receded.

The MSCI world equity index was last down by 0.29%, off an all-time high on Sept. 7. MSCI’s broadest index of Asia-Pacific shares outside Japan closed down 0.87%.

European equities bucked the trend, and Europe’s STOXX 600 closed up 0.44%.

The Dow Jones Industrial Average fell 91.51 points, or 0.26%, to 34,722.88, the S&P 500 lost 11.6 points, or 0.26%, to 4,469.1 and the Nasdaq Composite dropped 15.52 points, or 0.1%, to 15,146.01.

“(Retail spending) categories that were strongest in August were in Covid-beneficiary categories,” wrote Ellen Zentner, chief U.S. economist at Morgan Stanley.

“Now incorporating today’s retail sales release, we lift our real (personal consumer expenditures) tracking to +1.9% and GDP to +5.0%.”

Markets remain focused on next week’s Federal Reserve meeting for clues as to when the U.S. central bank will start to taper stimulus, especially after the flurry of U.S. economic data out this week.

On Tuesday, data from the U.S. Labor Department showed inflation cooling and having possibly peaked, but inflation in Britain was the highest in years, according to data on Wednesday.

“We have an unusual situation where the overall market is sideways to lower but with a  risk-on trend underneath and that’s down to signs the Delta variant may be peaking in the U.S., which is driving people into reflation and recovery plays,” said Kiran Ganesh, head of cross assets at UBS Global Wealth Management.

U.S. crude recently fell 1.2% to $71.74 per barrel and Brent was at $74.69, down 1.02% on the day.

The dollar index rose 0.506%, with the euro down 0.51% to $1.1755.

Spot gold slid 2.1% to $1,755.75 per ounce, after hitting an over one-month low of $1,744.30. U.S. gold futures settled down 2.1% at $1,756.70.

Caught in gold’s slipstream, silver was last down 4.3% at $22.79.

The U.S. 10-year Treasury yield was 1.3327%, while core euro zone government bond yields were little changed.

(Reporting by Elizabeth Dilts Marshall; editing by David Evans and Steve Orlofsky)

Crude Oil Price Forecast – Crude Oil Markets Pull Back Slightly

WTI Crude Oil

The West Texas Intermediate Crude Oil market has pulled back ever so slightly during the trading session on Thursday as we continue to see a line of noise in this market. Quite frankly, the move on Wednesday was probably just a little overdone, so it is not a huge surprise to see a little bit of a pullback. This pullback will almost certainly be bought into, with the $71.50 level could offer support, right along with the bottom of the candlestick from the previous session. The 50 day EMA is trying to break above the downtrend line, and therefore it is likely that the indicator could open up the possibility of support as well.

Crude Oil Video 17.09.21

Brent

Brent markets have pulled back to test the $75 level, which of course will attract a certain amount of attention but quite frankly it would not surprise me to see this market drop a little further. Just as with the WTI market, the 50 day EMA is trying to break above the downtrend line, and therefore it is likely that we would see a significant amount of support in that area. That being said, if we were to turn around a break down below it, then the market is likely to fall apart a bit. That is a market that will have shown a major turnaround in attitude, but that seems to be very on likely to happen anytime soon. The market looks as if it is trying to reach the highs again, so I do not really have a scenario in which I am a seller until we break down below that 50 day EMA.

For a look at all of today’s economic events, check out our economic calendar.

Oil Price Fundamental Daily Forecast – Strong Dollar, Gulf Facilities Recovery Encouraging Profit-Taking

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are inching lower on Thursday, but inside yesterday’s trading range, suggesting investor indecision and impending volatility.

The markets are being pressured by a stronger U.S. Dollar, which is making the dollar-denominated asset more expensive for foreign buyers, and easing of concerns over potential storm damage from Hurricane Nicholas and profit-taking after steep four day rally. Traders are shrugging off IEA and OPEC forecasts calling for a jump in future demand after pricing in this news earlier in the week.

At 13:30 GMT, December WTI crude oil futures are trading $71.71, down $0.13 or -0.18% and December Brent crude oil futures are at $74.68, down $0.10 or -0.13%.

US Dollar Edges Higher with Focus on Fed for Taper Clues

The dollar climbed to the higher end of recent ranges against other major currencies on Thursday, as traders looked to next week’s Federal Reserve policy meeting for indications on how soon the U.S. central bank will start to taper stimulus, Reuters reported.

The Federal Open Market Committee’s (FOMC) two-day policy meeting ending September 22 should provide some clarity on the outlook for both tapering and eventual rate hikes.

Tapering typically lifts the dollar as it suggests the Fed is one step closer to tighter monetary policy. The stronger dollar could weigh on foreign demand for U.S. crude. Tapering also means the central bank will be buying fewer debt assets, in effect reducing the amount of dollars in circulation, which in turn lifts the currency’s value.

Threat to US Gulf Production from Hurricane Nicholas Eases

U.S. Gulf energy companies have been able to restore pipeline service and electricity quickly after Hurricane Nicholas passed through Texas, allowing them to focus on efforts to repair the damage caused weeks earlier by Hurricane Ida, Reuters reported.

“As Nicholas spared U.S. production from further disruptions, it is difficult to see how oil prices can increase further in the near term,” said Rystad Energy analyst Nishant Bhushan.

“Ida-affected oil production capacity continues to recover in the U.S.”

Daily Outlook

Despite the weakness, in our opinion, the move is likely to only lead to a correction rather than a change in the trend. This is because the bullish fundamentals still outweigh the bearish fundamentals.

The bullish news includes low U.S. inventories. Oil prices jumped on Wednesday, supported by figures showing U.S. crude inventories fell by a bigger than expected 6.4 million barrels last week, with offshore oil facilities still recovering from the impact of Hurricane Ida.

Other bullish factors are signs of oil demand recovery. In closely watched reports this week, the International Energy Agency (IEA), the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. government’s Energy Administration (EIA) all updated their world demand and supply estimates in their monthly reports.

According to the numbers, world oil demand will rise back above 100 million barrels per day, a level last reached in 2019, as soon as the second quarter of next year. This news offset worries that the pandemic may curb oil use for longer or for good.

For a look at all of today’s economic events, check out our economic calendar.

Oil Surged Amid Falling US Inventories, Hitting Our Target!

Trading position 

We took the position in the forecasted $67.53-67.94 key support zone, and some partial profits were saved by our suggested stop-win at $68.82 last week. However, what’s the most important: the main target that we expected in our previous editions of Oil Trading Alerts at $72.30 was finally reached yesterday!

Market Analysis

U.S. crude inventories for the past week fell 6.4 million barrels (Mb), more than double what analysts had expected (2.7). Gasoline reserves have fallen by 1.9 million barrels, against 3.3 million expected. Notably, strategic crude oil reserves have also declined, by 500,000 barrels.

This phenomenon could be explained by the maintenance of a high level of exports despite the impact on production of the passage of Hurricane Ida in the Gulf of Mexico.

Exports have indeed increased compared to the previous week and are now higher than those of the same period last year.

As a consequence of Hurricane Ida, many companies had to suspend the activity of their rigs in the Gulf of Mexico, as well as of several refineries in Louisiana, also hit by the extreme climatic episode.

As a result, gasoline deliveries remain below their level of last year, even taking into account the drop in demand linked to the end of the summer period, with cooler temperatures.

Our view now is that we could see a pullback to previous supports, either $70.61 (which wouldn’t be the best entry from the risk-to-reward point of view) or $69.39 (which would be preferable). This retracement could either happen (Fig.1):

  • sraightaway, which would confirm a long-term bearish trend configuration by failing to break higher, above the $73.52 and $74.77 highs (the next resistance levels). Therefore, the market would be topping at a lower high (as defined by the Dow Theory) [scenario A].
  • once the auctioneers push the prices higher (at least above $73.52) – this scenario would redefine a new long-term bullish trend (with higher highs) [scenario B].

Given the recent market developments, the weekly chart (Fig.2) shows a bullish engulfing candle that could eventually confirm the continuation of a bullish trend.

Figure 1 – WTI Crude Oil (CLV21) Futures (October contract, daily)

Figure 2 – WTI Crude Oil (CLV21) Futures (October contract, weeky)

In summary, our trading plan on crude oil relies on various scenarios that we have described. For now, in order to see a clearer market picture, we will wait for confirmation. However, as always, we provide you with a pre-defined position that will (or not) be executed, depending on the next price action and oil supply/demand.

As always, we’ll keep you, our subscribers, well-informed.

Like what you’ve read? Subscribe for our daily newsletter today, and you’ll get 7 days of FREE access to our premium daily Oil Trading Alerts as well as our other Alerts. Sign up for the free newsletter today!

Thank you.

For a look at all of today’s economic events, check out our economic calendar.

Sebastien Bischeri
Oil & Gas Trading Strategist

* * * * *

The information above represents analyses and opinions of Sebastien Bischeri, & Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. At the time of writing, we base our opinions and analyses on facts and data sourced from respective essays and their authors. Although formed on top of careful research and reputably accurate sources, Sebastien Bischeri and his associates cannot guarantee the reported data’s accuracy and thoroughness. The opinions published above neither recommend nor offer any securities transaction. Mr. Bischeri is not a Registered Securities Advisor. By reading Sebastien Bischeri’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Sebastien Bischeri, Sunshine Profits’ employees, affiliates as well as their family members may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.