Strong Week Supported by Geo-Risks and Peak Rate Speculation

Commodity

Energy

Summary:

Most major commodities reversed sharply higher this week as the tragic developments in the Middle East raised concerns about stability in the region, thereby supporting the energy sector, not least European gas prices which surged higher.

Most major commodities reversed sharply higher this week as the tragic developments in Israel raised concerns about stability in the region, thereby supporting the energy sector, not least European gas prices which surged higher. Following weeks of weakness, the precious metal sector recorded strong gains, supported by Middle East safe haven demand and several U.S. Federal Reserve members saying the recent surge in Treasury yields has reduced the need for additional rate hikes. With the timing of peak rates moving closer, and despite a stronger-than-expected U.S. inflation print for September, gold managed to break higher through key resistance.

Elsewhere, the grains sector traded higher for a second week after the U.S. government lowered the size of this year's U.S. soybean and corn harvest leading to shrinking global inventories. Overall, all three major crops remain in their established downtrends amid abundant global crop supplies, not least from South America. Together with recent dollar strength, U.S. exporters have struggled to compete, thereby forcing prices lower to levels that eventually will attract buying interest from overseas buyers.

Overall, the Bloomberg Commodity Total Return Index (BCOMTR), which tracks a basket of 24 major commodity futures, rose 2.4% thereby ensuring the index maintained its upward trending trajectory which started back in June. Gains were led by the four diesel and crude oil futures contracts while the absolute outlier was the EU gas future (not included in the BCOMTR) which jumped by 35% to a seven-month high. Gold, meanwhile, was heading for its best week in seven months on a combination of speculators being forced to cover recently established short and the bullish momentum attracting fresh buying interest.

HG copper on the other hand was one of just three commodities trading lower on the week, under pressure from a rise in inventories at LME monitored warehouses to a two-year high and after sentiment among delegates at the annual LME week in London leaned bearish amid worries about global growth. Adding to this China's at best patchy recovery, the short-term outlook remains challenging but with the downside risk being cushioned by an overwhelming bullish long-term outlook. Strong Week Supported by Geo-Risks and Peak Rate Speculation_1

Strong Week Supported by Geo-Risks and Peak Rate Speculation_1

War risk premium lifts crude and fuel prices

The recent aggressive slump across the energy sector amid surging bond yields and the strong dollar accelerating demand worries saw a sharp reversal following the Hamas attack on Israel and subsequent counterattacks on Gaza. There is little doubt that a prolonged Israel-Hamas war could destabilize the Middle East, and in a worst-case scenario reduce global supply after Iran's foreign minister warned that Tehran-backed militants could open a new front.

Elsewhere, the IEA in their monthly oil market report said that oil's recent retreat from near $100 a barrel showed prices had climbed to levels that could see demand start to suffer, while OPEC repeated its projection for a record 3 million barrels a day deficit this quarter. Meanwhile, the EIA reported an increase in U.S. oil production to a record 13.2 million barrels a day and the biggest weekly inventory jump since February with refineries operating at their slowest pace since January amid seasonal maintenance.

While the macroeconomic outlook remains challenged and demand shows signs of softening, not least in the U.S. where implied gasoline demand on a four-week average basis shows continued weakness, the prospect of a geopolitical-led supply disruption and continued production restraint from OPEC+ will underpin prices in the weeks ahead.

Having fought so hard to support the price, and in the process giving up revenues, Saudi Arabia and its Middle East neighbors are unlikely to accept much lower prices. This leads us to believe support in WTI and Brent will, and probably already has been established ahead of $80. Barring any geopolitical disruption, the upside for now seems equally limited while the bear steepening of the U.S. yield curve continues to raise stagflation concerns and, with that in mind, Brent may once again settle into a mid-80's to mid-$90s range, an area we for now would categorize as being a sweet spot, not too cold for producers and not too hot for consumers.

Following a near 15% correction at the start of October, renewed Middle East tensions and fear of supply disruptions have seen Brent crude higher towards $90. Making any predictions for the coming weeks is somewhere near impossible, but we do note that GCC producers, led by Saudi Arabia, hold a very elevated amount of spare capacity that can be released in a worst-case scenario – should they choose to do so.

EU gas prices jump on winter supply worries

The European TTF benchmark gas futures jumped the most since last summer as the war in the Middle East led to a disruption of supply from Israel via Egypt, and Finland suspected a gas pipeline leak in the Baltic Sea was sabotage, fueling concerns about the safety of Europe's energy infrastructure ahead of the peak winter demand period. This follows the explosions on the Nord Stream pipelines from Russia to Germany last year, for which responsibility has yet to be determined.

The +35% surge which at one point took the price to a high of €56 per MWh for the first time since February, however, got underway after Israel ordered Chevron to shut production at the Tamar gas field. The site supplies pipelined gas to Egypt some of which is then converted into LNG and shipped to Europe. While the disruption is likely to be temporary it nevertheless highlights Europe's increased dependency on gas imports from other countries than Russia. Despite the very strong rally seen this past week the current price is still small change compared with the €160/MWh seen this time last year, and highlights market that is much better prepared for the coming winter with storage sites across the region being close to full and demand being down by more than 15% as recession and high energy prices hurt several heavy energy consuming industries. Strong Week Supported by Geo-Risks and Peak Rate Speculation_2

Strong Week Supported by Geo-Risks and Peak Rate Speculation_2

Improved gold fundamentals just as speculators turned bearish

Gold was heading for its biggest weekly gain in seven months, driven by safe haven demand in response to the tragic developments in the Middle East and Federal Reserve members preparing the market for a peak rate scenario. Prior to the bounce, gold had seen a +130-dollar slump to near key support above $1800. As a result of this weakness, hedge funds ended up holding a net short ahead of the bounce that followed the Hamas attacks on Israel.

The latest slump culminated following another surprisingly strong U.S. job report supporting the higher-for-longer narrative and which saw long-end U.S. Treasury yields reach fresh multi-year highs. Since then, however, yields have started to reverse lower driven by the tragic events in the Middle East and comments from several Fed members mentioning the tightening impact of rising bond yields reducing the need from the FOMC to hike rates further. Both developments have forced hedge funds to reverse the recently established net short position back to a long.

In our recently published outlook for the fourth quarter, titled "Bond. Long bond(s)", our core thesis is that real rates are too positive, creating a fallout from sectors and consumers with refinancing needs. As spending is likely to slow and the U.S. fiscal cycle is turning from tailwind to headwind, the world may indeed have reached 'peak rates', providing a four-decade opportunity to go long bonds. On bonds, we also noted that the stagflation risks and 'higher for longer' observed through inflation expectations and lately driven by higher energy prices may pose a timing threat to our long bonds theme. However, an economic downturn, as the lagged effects of the recent rate hike cycle kick in, will force central banks into cutting interest rates, lowering the short-end of the U.S. yield curve and, as the effects deepen, the long-end of the yield curve will follow lower, reflecting the need for lower long-term real rates or even negative real rates.

Despite seeing yields move higher again following a stronger-than-expected U.S. inflation print for September, the focus in the gold market seems to be changing back to one of support, not least given the prospect of rising yields – as per this week's Fed comments -reduces the risk of further rate hikes. In our latest precious metal update, we take a closer look at these and other recent developments supporting the improved sentiment.

Gold continued higher on Friday following an impressive week that saw no attempts to close the 10-dollar gap below $1844 that was left open on Monday. Having broken back above $1900 the next major level of resistance is not until the 200-day moving average around $1930 followed by the recent peak near $1950.

Grain prices pop but downtrends remain

The U.S. grain and soybean sector, led by slumping wheat prices, received a small boost after the U.S. Department of Agriculture (USDA) in a monthly report pegged the soybean harvest at 4.104 billion bushels, 42 million fewer bushels than forecast in September and 30 million bushels below an average of analysts' estimates. The price jump that followed also helped give wheat and corn prices a boost, after falling to a 3-year and 33-month low last month. The December wheat contract trades down by one-third compared to the same time last year while corn has lost 29% and soybeans only 6.5%. Similarly, these three key crops have been challenged by a summer harvest that ended up being better than originally feared, and a stronger dollar making exports from other producers more competitive, most notably Brazil and Argentina for corn and Russia and Europe for wheat.

With the northern hemisphere harvest done and the result known, the attention will be turning to South America and Asia, not least considering the prospect of La Niña causing dry conditions in Australia, a major wheat producer, while supporting production in South America as La Niña normally delivers plenty of rain.

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[Quick Facts]

1. U.S. recession is no longer the consensus.

2. Biden can't squeeze Iranian and Russian oil at the same time.

3. Fed's Bullard says markets are too complacent on inflation and rates may rise to 6.5%.

4. U.S. consumer confidence drops as inflation fears increase.

5. Fed's Harker says rate hikes are likely over.

6. Oil prices were volatile in the past week under the Middle East conflict.

[News Details]

U.S. recession is no longer the consensus

In the Wall Street Journal's latest quarterly survey, economists began to be optimistic about the U.S. economy. They now believe that the U.S. will avoid a recession, the Federal Reserve has finished raising interest rates, and inflation will continue to ease. Business and academic economists also saw less probability of a recession next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year.

Biden can't squeeze Iranian and Russian oil at the same time

The United States wants to tighten sanctions against Russia and Iran, but doing both at once will bring great political risks to President Joe Biden. U.S. Treasury Secretary Janet Yellen said earlier that new measures against Iran were possible, but she said nothing about the most obvious way to hurt Iran, which is to restrict the flow of oil. It is clear that any substantial cuts in Iranian oil exports will only increase market demand for oil from competitors such as Russia, and that will also tighten global oil markets.

Fed's Bullard says markets are too complacent on inflation and rates may rise to 6.5%

Former St. Louis Fed President James Bullard said investors were too complacent about inflation and the Fed might have to raise interest rates to 6.5% if inflation heats up again. He believes the market is underestimating the risk that inflation decline stalls or stops and core inflation starts to rise again, which would spark a new round of panic among policymakers about whether the Fed has taken enough action. If this happens, the FOMC will have to consider raising interest rates to 6% or 6.5%.

U.S. consumer confidence drops as inflation fears increase

The U.S. consumer confidence retreated by about 7% this October after two consecutive months of marginal changes. Assessments of personal finances fell by about 15%, mainly due to a sharp increase in inflation fears, while one-year business conditions were down 19%. Long-term expectations of business conditions changed little, however, suggesting that consumers do not believe that the current deterioration in economic conditions will continue. In addition, confidence declined across all demographic groups, reflecting the persistent impact of high oil prices.

Fed's Harker says rate hikes are likely over

U.S. Philadelphia Fed President Patrick Harker said on October 13 that the evolution of the U.S. economy and financial conditions was better than he had expected as prices were cooling and labor market tensions eased. I am sure that the policy rate is restrictive, and as long as the policy rate remains unchanged, we will steadily bring inflation down and make the market more balanced, Harker said.

The Fed has made progress in bringing down prices without causing a surge in unemployment or otherwise tanking the economy. He believes that the Fed can watch the impact of interest rate hikes on the economy and use incoming data as its guide to where policy needs to go.

According to the analysis of recent data and market feedback, the Fed can keep the federal funds rate at its current level and stop raising interest rates. However, he "would have no hesitancy to support further rate increases" if inflation were to rebound, he said.

Oil prices were volatile in the past week under the Middle East conflict

Oil prices have had a tumultuous week. It wasn't long ago that oil prices jumped 4% as Iran said a new conflict between Israel and Hamas could happen. Traders are now trying to consider the possibility that the conflict could bring Iran into the picture, as it is a supplier of weapons and money to Hamas. In addition, they also consider the risk of broader oil supply disruptions. Last Friday's rally suggested that the market removed bearish bets ahead of the weekend.

[Focus of the Day]

UTC+8 15:00 ECB Governing Councilor Villeroy delivers a speech

UTC+8 16:30 Peel, chief economist of the Bank of England, delivers a speech

UTC+8 22:30 Philadelphia Fed President Harker speaks on the economic outlook

UTC+8 04:30 Next Day: Philadelphia Fed President Harker speaks on the economic outlook

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Warren Takunda

Economic

United States

Earnings Season: The onset of the earnings season will feature major players like Tesla, Bank of America, Johnson & Johnson, Procter & Gamble, and Netflix. These reports will be closely watched by investors for insights into corporate performance and the outlook for the economy.

Federal Reserve Speeches: Several Federal Reserve policymakers will deliver speeches, and investors will closely monitor these speeches to assess the potential trajectory of monetary policy in the coming months. The Fed is expected to continue raising interest rates in an effort to combat inflation, but the pace and magnitude of future rate hikes are uncertain.

Economic Data:Data releases in the U.S. will include retail sales, building permits, housing starts, existing home sales, industrial production, business inventories, overall capital flows, NAHB Housing Market Index, NY Empire State Manufacturing Index, and the Philadelphia Fed Manufacturing Index. These data points will provide insights into the health of the US economy and the impact of the Fed's interest rate hikes.

International

Inflation Rates: Inflation rates will be closely monitored in several countries, including the United Kingdom, Canada, Japan, New Zealand, South Africa, and Malaysia. Inflation remains elevated in many countries, and investors are looking for signs that it is peaking.

China's Economic Data:China will release its Q3 GDP growth rate, retail sales, industrial production, fixed asset investment, unemployment rate, and house price index. These data points will provide insights into the performance of the world's second-largest economy, which has been slowing in recent months.

United Kingdom:The UK will release key economic data, including inflation, unemployment rate, retail sales, Gfk consumer confidence, and public sector net borrowing. UK consumer price data for September is expected to show a slowdown in annual inflation.

Germany:The Zew Economic Sentiment Index in Germany is expected to reach a six-month high in October. Inflation data will also be released for the Eurozone and Italy.

Other International Data:Additional economic data includes the Euro Area's balance of trade, current account, and construction output; Germany's producer and wholesale prices; France's business confidence; and Switzerland's foreign trade.

The week ahead will be marked by corporate earnings reports, central bank speeches, and key economic data releases in various countries, providing valuable insights into the global economic landscape. Investors should monitor these events and data releases closely to make informed investment decisions.

To stay updated on all economic events of today, please check out our economic calendar

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Owen Li

Energy

Commodity

Energy - Brent back above $90/bbl

The oil market saw quite a move on Friday. ICE Brent settled 5.69% higher on the day, taking the front-month contract back above US$90/bbl - to its highest since early October. Uncertainty and concern over the escalation of the Israel-Hamas war continue to support the oil market. In recent days, Iran has warned about the risk of a wider conflict, while there are reports that Saudi Arabia has frozen talks to normalize relations with Israel.

Providing a further boost to the oil market was the US Treasury imposing sanctions on two companies who apparently shipped Russian oil above the US$60/bbl G-7 price cap while using US-based shipping services. This is the first time we have seen the G-7 price cap enforced, which will raise fears that it will become more difficult to ship Russian oil and tighten the market up further. The US will be careful about enforcing the cap too strongly, particularly given the growing tension in the Middle East.

Despite recent developments in the oil market, speculators remain reluctant to jump into the market. The latest positioning data shows that speculators reduced their net long in ICE Brent by 65,161 lots over the last reporting week to 153,174 lots as of last Tuesday. This move was largely driven by longs liquidating.

The last week also saw a bit more activity from US oil drillers with the US oil rig count increasing by 4 last week to 501. While only a modest increase, it is still the largest weekly increase since March. Rig count changes in the weeks ahead will need watching because if this continues, it will suggest that US producers could be relaxing the capital discipline we have seen from them in recent years amid the higher price environment.

China released its first batch of September trade data on Friday, which showed that crude oil imports averaged around 11.17MMbbls/d over the month, down 11% MoM, but still up 14% YoY. This leaves cumulative imports over the first nine months of the year at 11.39MMbbls/d, up 14.5% YoY.

As for the calendar this week, the market will obviously continue to follow closely how the Israel-Hamas situation evolves. While for natural gas markets, workers in Australia are set to resume strike action at Chevron's Gorgon and Wheatstone LNG facilities on Thursday if involved parties cannot resolve their differences in final negotiations.

Metals - Gold breaks higher

Spot gold saw significant strength on Friday. Prices settled more than 3.4% higher on the day, taking the market back above US$1,900/oz and to their highest since mid-September. A fall in US treasury yields will have provided some support to the gold market, while the ongoing uncertainty in the Middle East will likely have boosted demand for safe-haven assets.

That said, when looking at weekly changes in gold ETF holdings, we do not see strong evidence of investor buying yet. In fact, ETF holdings in gold fell by 397koz last week to 86.7moz. The gold market has now had 20 consecutive weeks of ETF outflows. However, if uncertainty in the Middle East lingers and rates have peaked, we could start to see gold looking increasingly attractive to investors.

Agriculture – Ukraine's corn and soybean harvest jumps

The latest data from Ukraine's Agriculture Ministry shows that the domestic grain harvest is up 31% YoY to 35.6mt as of Friday. The increase was driven largely by corn, with the harvest increasing to 5.8mt from 1mt over the same period last year. Similarly, the soybean harvest rose to 3.8mt, up from 1mt last year.

Trade data from China Customs released on Friday show that China's soybean imports fell 23.6% MoM and 7.3% YoY to 7.15mt in September, due to weak crush margins, slow presales of soymeal, and poor hog margins. However, cumulative imports are still up 14.4% YoY to 77.8mt over the first nine months of the year.

The latest CFTC data show that money managers reduced their net bearish bets in CBOT corn by 46,742 lots to 112,691 lots as of 10 October. The fall was led by short-covering with the gross short decreasing by 36,609 lots to 286,547 lots. For soybeans, speculators decreased their net bullish bets by 2,835 lots to just 2,166 lots - the lowest since the week ending 30 May. Meanwhile, CBOT wheat saw speculators add to their net short by selling a further 5,547 lots, leaving them with a net short position of 104,335 lots.

Source: ING

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Damon

Forex

Risk sentiment remained shaky over the past week as markets digested a mix of renewed geopolitical worries, mixed data on inflation and cautious signals from the central bankers. The conflict between Israel and Hamas has quickly escalated into the worst bloodbath in 50 years on both sides. Hamas’s attacks are estimated to have caused 1300 casualties, most of which civilian, while Israel has begun a massive counteroffensive towards Gaza in response. Possible involvement of the Iran-backed Hezbollah remains a key worry, although many of the surrounding Arab nations, including Qatar and Egypt, have so far pushed to avoid further escalation. As both Israel and Iran are small natural gas exporters, and the production of the former has already been affected, European natural gas prices rose by around 40% this week. Oil markets have remained calmer, dampened by cooling demand and spare production capacity especially in Saudi Arabia.

On the data front, US September CPI surprised to the upside for the second month in a row. Headline CPI rose by 0.4% m/m (consensus 0.3%), while core CPI was better in line with expectations at 0.3% m/m (consensus 0.3%). Shelter inflation (+0.65% m/m; Aug +0.29%) accelerated against expectations, even though more timely rental price indices still point towards moderating inflation. Health care prices, which are distorted by lagged estimation of health insurance premiums, contributed to the upside surprise as well. Excluding the two categories, core services inflation cooled in m/m terms, which is a positive signal of moderating underlying inflation for the Fed. We still believe rate hikes are already over in the US, which remains the base case for the markets as well.

While equity and credit markets remained relatively stable, longer-dated US yields rose towards the end of the week and broad USD appreciated. Besides the CPI print, weak demand on 3y, 10y and 30y UST auctions played a role, as persistent budget deficits seem to remain a key worry for markets even amid the uncertain economic outlook. In any case, central bankers have sounded increasingly cautious about hiking rates further in an environment where financial conditions have tightened markedly since summer. September meeting minutes from both the ECB and the Fed also flagged growing worries about the risk of overtightening monetary policy.

Next week, the focus will turn to economic data. US retail sales are expected to signal weakening consumer demand after early credit card data and leading services PMI components fell in September. In Europe, German October ZEW index will provide hints on the latest investor sentiment amid higher uncertainty, and final September HICP data will give more detailed insight into inflation drivers. In UK, focus will be on both labour market and inflation data. The latest KPMG and REC report on jobs pointed towards cooling wage inflation, while markets will keep a close eye on if the August downtick in price inflation was just a one-off. In China, Q3 GDP is expected to come out around 1.0% q/q, which would pave way for the government to meet its growth target of 5%.

Article Source: ACTIONFOREX

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Owen Li

Commodity

Industrial Metals Monthly: Uncertainty the Watchword During LME Week_1

As LME Week, the metals industry's biggest annual gathering, is coming to an end, bearish sentiment takes the lead as we look towards the final quarter of another turbulent year. A weak macroeconomic environment, geopolitical risks and a growing sense of uncertainty have dominated discussions this year. China's economic slowdown, fears of a higher-for-longer interest rates environment, weak global manufacturing and looming supply surpluses amid rising LME inventories remain the key risks ahead.

China's real estate worries deepen

China's official gauge of manufacturing activity only just returned to growth for the first time in six months, at 50.2, in September. However, all things related to the property market continue to struggle. Stimulus measures introduced over the last couple of months are yet to have a meaningful impact on metals demand. Additional measures might be necessary to boost demand for industrial metals.

Renewed concerns over the fate of China Evergrande have surfaced following the detention of its chairman. And there are still questions looming over the economy's largest developer, Country Garden, after it warned that it might not be able to meet repayments on offshore debt.

A slump in China's property market has been a major headwind to metals demand this year, with the LMEX Index of six metals down around 10% this year. During Golden Week in early October, which is typically a prime time for property developers, home sales declined from last year.

A continued slowdown in China's property sector remains the main threat to metals demand looking ahead.

Industrial Metals Monthly: Uncertainty the Watchword During LME Week_2

We believe the short-term outlook remains bearish for metals demand and we do not foresee a substantial recovery before next year. Metals prices should continue to trade under pressure in the fourth quarter with the only upside risk being if Chinese demand recovers faster than anticipated. Prices are likely to remain volatile through the quarter as markets will continue to react to macro drivers.

US interest rates reaching peak

US consumer price inflation for September rose slightly faster than the consensus forecast, pushing the dollar and Treasury yields higher.

Meanwhile, US payrolls surged in September, underscoring the strength seen in economic activity over the summer backing the Fed's argument on the need for interest rates to stay higher for longer.

The market pricing around the possibility of a rate hike by December has increased marginally, but our US economist doubts it will happen. Fed officials have been emphasising the importance of the increase in Treasury yields as a factor that will tighten financial conditions and reduce the need for another rate hike.

Our US economist believes that monetary policy is restrictive enough and doesn't think that the Fed will hike again.

Elevated rates have been a drag on industrial metals consumption. Looking forward to 2023 and further into 2024, the possibility of US Fed continuing to raise rates and other major economies continuing with monetary tightening, remains the key uncertainty for metals markets.

If US rates stay higher for longer, this would lead to a stronger US dollar and weaker investor sentiment, which in turn would translate to lower metals prices.

LME warehouse stocks pile up

Weak demand for industrial metals amid China's slow economic recovery and a slowdown in manufacturing globally is translating into rising inventories in LME-registered warehouses, the market of last resort. However, they remain low by historical standards. We believe low inventories fuel the possibility for spot prices to rise rapidly if consumption picks up sooner than expected.

Industrial Metals Monthly: Uncertainty the Watchword During LME Week_4

For copper, global LME stocks now stand at 179,675 tonnes as of 11 October, up more than 100% from 88,550 tonnes at the start of 2023, and the highest it has been since October 2021. LME copper stocks have been rising for the past few months and have more than tripled since July.

For zinc, LME warehouse stocks have risen to 89,050 tonnes, up more than 190% from 30,475 tonnes in January. Zinc inventories reached their peak this year at the end of August at 153,975 tonnes.

Aluminium stocks in LME warehouses have also been rising. They are currently at 492,650 tonnes, up 10% from 447,250 tonnes at the beginning of the year. And as LME inventories continue to rise, a lack of brand variety is adding to concerns for the aluminium market. About 76% of aluminium in the LME's warehouses was of Russian origin at the end of September, up from less than 10% before the start of the war in Ukraine. This is the highest level for at least a decade. However, the share of the Russian metal declined from 81% at the end of August. India is the other major source of LME aluminium stocks.

There are no sanctions on buying Russian material but some European buyers have been self-sanctioning since Russia's invasion on Ukraine, leading to fears that LME warehouses could be used as a dumping ground for unwanted Russian metals, leading to a disconnect between LME and actual traded prices.

Industrial Metals Monthly: Uncertainty the Watchword During LME Week_5

Meanwhile, spot metals prices on the LME have been trading at a big discount to futures – a market condition known as contango, indicating that supply is exceeding demand in the spot market.

For aluminium, that discount is the biggest since 2008, while copper's contango is the widest in over two decades, which could indicate more material is on the way to LME warehouses. Industrial Metals Monthly: Uncertainty the Watchword During LME Week_6

Industrial Metals Monthly: Uncertainty the Watchword During LME Week_6

Source: ING

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Alex

Energy

This week, Saudi energy minister Prince Abdulaziz bin Salman visited Moscow to discuss plans for oil production in the context of the Israeli-Palestinian conflict. The Russian president announced that Saudi Arabia and Russia’s production cuts are “likely” to continue.

Meanwhile, Magid Shenouda, deputy chief executive of commodities trading giant Mercuria, told the industry conference in the UAE that oil prices could reach USD 100 a barrel if the situation in the Middle East worsens.

The chart shows that USD 100 a barrel has become more likely due to price action:

→ in August, a range was formed (shown in purple), from which the price moved up, indicating that demand had gained dominance over supply. And it looks like this zone may provide support to the bulls;

→ bulls can also count on support from the lower border of the parallel channel (shown in blue) and events this week show that this line provides significant support;

→ the price closed the bullish gap of Monday – from the point of view of technical analysis, the chances of growth have increased.

The weekend is approaching. If the coming days also bring an escalation in Israel, it is possible that this will give a new impetus to the price towards the psychological mark of USD 100 per barrel.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Article Source: ACTIONFOREX

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Strong Week Supported by Geo-Risks and Peak Rate Speculation

War risk premium lifts crude and fuel prices

EU gas prices jump on winter supply worries

Improved gold fundamentals just as speculators turned bearish

Grain prices pop but downtrends remain

October 16th Financial News

[Quick Facts]

[News Details]

[Focus of the Day]

Busy Week Ahead for Markets with Earnings, Fed Speeches, and Key Economic Data

United States

International

Oil Market Remains Nervous

Source: ING

Geopolitics and Inflation Spark Volatility in the Markets

Article Source: ACTIONFOREX

Industrial Metals Monthly: Uncertainty the Watchword During LME Week

Source: ING

Probability of Oil Prices Rising to $100 Is Increasing

Article Source: ACTIONFOREX

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