Oil Prices Jump On Geopolitical Uncertainty But Demand Concerns Remain

Commodity

Political

Summary:

Crude oil prices began trade this week with a gain following the news that Islamist rebel groups had ousted Syria’s President Bashar Assad and taken over the country in a…

Crude oil prices began trade this week with a gain following the news that Islamist rebel groups had ousted Syria’s President Bashar Assad and taken over the country in a blitzkrieg-style offensive that lasted less than a month.

At the time of writing, Brent crude was trading at $71.54 per barrel, with West Texas Intermediate at $67.63 per barrel. The price gains were limited as pessimism about demand growth remained strong.

“The development in Syria has added a new layer of political uncertainty in the Middle East, providing some support to the market,” Mitsubishi UFJ Research and Consulting analyst Tomomichi Akuta told Reuters.

“But Saudi Arabia's price reductions and OPEC+'s production cut extension last week underscored weak demand from China, indicating the market may soften toward year-end,” Akuta added.

“Markets are largely pricing that the tensions in Syria will remain contained within its own space and the risks of a wider oil supply disruption remain low,” IG market strategist Yeap Jun Rong told Bloomberg.

Saudi Arabia said it would cut oil prices for January deliveries, reinforcing fears of an oversupply next year, as predicted by numerous forecast outlets. However, some analysts warn that oil demand is being underestimated and oversupply is being overestimated, which could result in a rude awakening at some point in 2025.

Last week, Morgan Stanley revised its Brent crude price forecast for 2025 upwards, saying the OPEC+ decision to delay production cut reversals would result in a smaller-than-expected supply overhang, even factoring in what has been widely perceived as weakening China demand.

“The action taken by OPEC+ eats quite heavily into the surplus that was expected over 2025. However, the extension and the slower return of barrels is not enough to push the market into deficit next year,” ING analysts said following the group’s decision, made last week.

Source: OILPRICE

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Warren Takunda

Stocks

London stocks were set to edge up at the open on Monday as investors eyed a week packed with central bank policy announcements.

The FTSE 100 was called to open around 11 points higher.

Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "The European Central Bank (ECB), the Bank of Canada (BoC), the Reserve Bank of Australia (RBA) and the Swiss National Bank (SNB) will announce their latest policy verdict throughout this week and all - except the RBA - are expected to lower their rates.

"The BoC is expected to cut by 50bp while the SNB and the ECB are expected to announce a 25bp cut. Some investors are convinced that the ECB could announce more than a 25bp cut. Either it could go bigger with a 50bp cut, or cut by 25bp but shift their focus from inflation to economic growth. I believe that the second option is more plausible. If that’s the case, we should not see a significant selloff in the euro post-decision."

Earlier, data from the National Bureau of Statistics showed that consumer price inflation in China fell to a five-month low in November, slowing to 0.2% year-on-year from 0.3% the month before and falling short of expectations of 0.5%.

Core inflation - which excludes food and fuel prices - rose 0.3% in November, down from 0.2% in October.

In UK corporate news, GSK said the US Food and Drug Administration has agreed to look at data from its MATINEE study to support the regulatory review process to obtain a new indication for the use of its Nucala drug as an add-on maintenance treatment for patients with chronic obstructive pulmonary disease.

The study met its primary endpoint with the addition of mepolizumab to inhaled maintenance therapy, achieving a “statistically significant and clinically meaningful reduction” in the annualised rate of moderate/severe exacerbations versus placebo with patients treated for 52-104 weeks.

Early-stage science investor IP Group said it plans to increase its share buyback plan after raising £15m from the sale of minority holdings in several portfolio companies.

The company said it has agreed the sale of stakes of less than 10% each in nine portfolio companies across its balance sheet and managed funds to Lexham Partners.

All proceeds will go towards its share repurchase programme, which will rise to £45m, up from the £30m previously planned.

Source: Sharecast

Risk Warnings and Disclaimers

Add to Favorites

Justin

Commodity

Political

An alliance of Islamist rebels has taken over Syria, with President Bashar Assad fleeing the country for Russia. Per media reports, world leaders are currently watching the alliance, including an Al-Qaeda affiliate that has been designated as a terrorist group.

According to a Reuters report on the regime change in Syria, the event constitutes a major change in the course of Middle Eastern politics as it deprives Russia and Iran of a key ally in the region. Some observers have seen the takeover as a big win for Israel and Turkey.

The resurgence of Syrian rebel groups began in mid-November as Israel accelerated its attacks on Iran-affiliated groups in the country. The rebel forces appeared to have felt emboldened, not only because of Israel’s attacks on Iranian proxies in Syria, but also because Israel had severely weakened Hezbollah in Lebanon, and Hezbollah was a key force for maintaining Assad’s grip on power.

The situation remains quite uncertain despite hopeful reports from mainstream media suggesting the takeover would bring positive change to Syria and the Middle East. For starters, Israel is already moving in to take over the buffer zone separating the Israeli-occupied Golan Heights and the rest of Syria. The terrorist group designation of Hayat al-Tahrir al-Sham could also be a problem as this situation develops.

“This is a historic day in the history of the Middle East,” Israel’s Prime Minister Benjamin Netanyahu said on Sunday. “Together with the Defense Minister, and with full backing from the Cabinet, I directed the IDF yesterday to take control of the buffer zone and the dominant positions near it,” he said, adding “We will not allow any hostile force to establish itself on our border.”

Oil prices rose in response to the latest developments in Syria as the security of Middle Eastern supply returned to the spotlight.

Source: OILPRICE

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

If you are wondering how markets have reacted to the stunning fall of President Bashar al-Assad in Syria, the answer is calmly. Gold and oil prices are up around 0.4%, but that's a modest move for such a rapid turn of events and there are no signs of a rush to safety. Maybe there's just too much going on in the Middle East for traders to know how to react.

It would certainly seem to be a bloody nose for Russian President Putin who has spent years propping up the Assad regime and stands to lose control of his only naval base in the Mediterranean.

Moscow claimed to have a deal to keep the base and its Hmeimim air facilities in Latakia province, according to a Kremlin source quoted by Russian media, while Russia's foreign ministry played down any immediate risk. But it was far from clear whether the rebels had agreed to such a deal. The loss of those bases would severely degrade Russia's power projection in the Middle East and Africa.

Political uncertainty was also a feature in Asia where South Korean stocks slid anew after President Yoon Suk Yeol survived an impeachment vote, only for prosecutors to name him as a subject of a criminal investigation over last week's martial law attempt.

South Korea's finance ministry was out early on Monday to reassure markets of all the support they needed, but the won still slipped towards two-year lows and stocks shed more than 2%.

Sentiment was further strained by a surprisingly sharp 0.6% month-on-month drop in China's consumer price index in November, stoking market mutterings that not enough was being done by Beijing to revive the economy.

Chinese leaders are set to spend two days this week in closed-door talks on next year's policy ambitions during the central economic work conference, but the suspicion is that nothing concrete will come of it.

Core U.S. inflation figures are due on Wednesday and a result above the +0.3% forecast would challenge the market's confidence in a December rate cut by the Fed. The implied probability is currently at 83% with a further 75 basis points of easing priced in for next year.

In that regard, it was a relief that President-elect Donald Trump said on Sunday he would not try to replace Fed Chair Jerome Powell upon taking office in January.

Of the central banks meeting this week, the ECB is seen cutting by 25 basis points and the BoC by 50 bps. The SNB could also go by 50 bps given how much it has been spending to restrain the Swiss franc. The scale of its intervention to sell francs for euros is likely the reason why the single currency is not testing parity on the U.S. dollar right now.

Key developments that could influence markets on Monday:

- Participation by ECB board member Piero Cipollone in Eurogroup meeting

- Bank of England Deputy Governor Dave Ramsden gives a speech on financial stability

- Euro zone finance ministers meet to assess their Draft Budgetary Plans

- Euro Zone Sentix Index for Dec

Source: Reuters

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

Risk Warnings and Disclaimers

Add to Favorites

ACY

Economic

Commodity

As 2024 concludes, the commodity markets face a unique blend of economic policies, geopolitical pressures, and evolving supply-demand dynamics. Here's a breakdown of the key developments shaping the landscape.

OPEC+ Strategy and U.S. Policy Shifts

OPEC+ has once again postponed its planned production hikes, extending cuts until April 2025. The decision comes amid persistently low oil prices, hovering around $73 per barrel, and a surplus expected in the first quarter of 2025. These cuts aim to stabilize the market and avoid oversupply during a seasonally weak demand period.

In the U.S., energy policy under the incoming administration emphasizes growth, including a push to increase domestic oil production by 3 million barrels per day. This initiative could reshape global energy markets, particularly as the U.S. accelerates approvals for LNG export projects to meet growing international demand. However, the benefits of these projects may not materialize until later in the decade.

Metals: Trade Disputes and Supply Challenges

The metals market highlights the interplay of geopolitics and resource dependency. Gallium and germanium, essential for advanced technologies, have become focal points in the U.S.-China trade tensions, with China imposing an export ban. This escalation reflects the strategic importance of critical materials.

Base metals, meanwhile, face constrained supplies, setting the stage for higher prices in 2025. Aluminum and copper are particularly strong performers, with demand outpacing supply due to infrastructure investments and energy transition initiatives globally.

Gold: Dual Drivers of Fear and Wealth

Gold continues its upward trajectory, driven by two key factors: fear and wealth. On the one hand, geopolitical uncertainties and rising fiscal deficits have reinforced gold’s role as a safe-haven asset. On the other, central banks in emerging markets and retail investors in Asia are bolstering demand, viewing gold as a hedge against currency depreciation and economic instability. Projections suggest gold could surpass $3,000 per ounce by late 2025, solidifying its status as a cornerstone investment for uncertain times.

China’s Corn Market Under Pressure

China’s corn prices have fallen to their lowest levels in four years due to poor weather damaging harvests and flooding the market with lower-grade grain. Farmers have struggled to find buyers, intensifying price declines. Despite government interventions like stockpiling, sluggish demand and weak economic conditions have limited recovery, highlighting the broader challenges facing global agricultural markets.

The commodity markets are navigating a challenging yet transformative phase. From OPEC+ strategies and U.S. energy policies to the metals trade war and agricultural pressures, 2024 has underscored the intricate interplay of economics and geopolitics. As we enter 2025, market participants must stay vigilant to these evolving dynamics, which are poised to shape investment strategies and global economic trends in the coming year.

This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

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

Risk Warnings and Disclaimers

Add to Favorites

Pepperstone

Economic

Something of an inconclusive US labour market report on Friday leaves participants with perhaps more questions than answers as the new trading week gets underway, with just two ‘proper’ weeks left until the festive period begins in earnest.

The US economy added 227k jobs in November, marginally above consensus expectations, and agonisingly close to my own guesstimate of +235k. Added to this, the prior two prints were revised higher by a net +56k, taking the 3-month moving average of job gains to its highest level since May. Of course, a significant chunk of the job gains seen in November were an unwinding of the weather- and strike-related job losses that occurred a month before.

Meanwhile, average hourly earnings continue to grow at a solid clip, which should keep the pace of consumer spending resilient, albeit one that doesn’t particularly threaten sustainable achievement of the 2% inflation target over the medium term. Growth of 0.4% MoM, and 4.0% YoY, was unchanged from the pace seen in October, but I’d imagine some of the FOMC’s hawks would probably want this to cool sooner rather than later.

It is, though, the household survey where there is more cause for concern, though a pinch of salt is required given the volatility of the survey this cycle, and falling response rates. In any case, unemployment rose to 4.2%, just shy of the cycle high 4.3% seen in July, while participation slipped to 62.5%, its lowest level since May.

So, the nub is – a solid rebound in payrolls, strong earnings growth, coupled with rising unemployment.

A bit of a head-scratcher, then, for market participants and policymakers alike to grapple with. I’d argue, however, that the rise in unemployment should be enough to cement the case for a 25bp December Fed cut, if only for the reason that it solidifies the idea that the ‘path of least regret’ points in such a direction. If policymakers are concerned about stalling disinflationary progress, or potential upside inflationary risks in the early days of a Trump presidency, then they can perhaps ‘skip’ the January meeting instead.

Participants, by and large, took the jobs report in their stride, with the figures of course dropping at a rather odd time of year, where liquidity is thin, and volumes considerably lighter than usual.

Stocks ended the day in the green, with the tech-heavy Nasdaq leading the way higher, while the benchmark S&P 500 notched its 57th all-time closing high of the year. With just 16 trading days to go, 1995’s record of 77 ATHs in a calendar year shan’t be beaten, but the bulls should nevertheless remain in control, as the economic and policy backdrops remain supportive, leaving dips as buying opportunities, albeit with conviction perhaps dwindling as the year draws to a close.

The dollar, meanwhile, was choppy but ultimately a touch softer post-NFP on Friday, though this wasn’t enough to stop the buck from notching a weekly gain – its 9th in the last 10 against a basket of peers, incidentally. I remain a firm believer in the case for further USD upside, as risks around the FOMC outlook become increasingly two-sided into 2025, and as the US economy continues to vastly outperform that of peers. Some haven demand amid renewed geopolitical risks, particularly weekend developments in Syria, might also provide further help to the bull case, at the margin.

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

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Stocks

Shares were mostly lower Monday in Asia, with South Korea’s benchmark down 2.3%, after U.S. stocks closed out last week with more records.

The impact on world markets from the overthrow of Syrian leader Bashar Assad, who sought asylum in Moscow after rebels ended the Assad family’s 50 years of iron rule, remained unclear. Oil prices were mixed, while U.S. futures edged lower.

The political situation remained tense in South Korea as local media reported that the police were considering imposing an overseas travel ban on President Yoon Suk Yeol. Yoon’s status remained uncertain after he declared martial law last week in the midst of a budget dispute and then reversed that hours later.

The Kospi in Seoul dipped 2.3% to 2,372.02.

Chinese shares also fell, with Hong Kong’s Hang Seng down 0.6% at 19,753.26 and the Shanghai Composite index falling 0.4% to 3,390.62. Investors are awaiting a major economic planning meeting expected this week that will set the policy agenda for coming months, possibly bringing fresh stimulus for the world’s No. 2 economy.

Tokyo’s Nikkei 225 index edged 0.2% higher, to 39,161.10 as the Japanese yen gained against the U.S. dollar. The dollar was trading at 149.94 yen early Monday, down from 150.07 yen. Traders are increasingly expecting the Bank of Japan to raise interest rates to help counter the yen’s prolonged slump against the dollar and keep price increases under control.

In Australia, the S&P/ASX 200 fell 0.2% to 8,400.80. India’s Sensex edged 0.1% lower, while Taiwan’s Taiex gained 0.4%. In Bangkok, the SET was down 0.3%.

On Friday, U.S. stocks rose to records Friday after data suggested the job market remains solid enough to keep the economy going, but not so strong that it raises immediate worries about inflation.

The S&P 500 climbed 0.2% to 6,090.27, just enough to log another all-time high, closing a third straight winning week in what looks to be one of its best years since the 2000 dot-com bust. The Dow Jones Industrial Average dipped 0.3% to 44,642.52, while the Nasdaq composite rose 0.8% to set its own record of 19,859.77.

The jobs report strengthened traders’ expectations that the Federal Reserve will cut interest rates again at its next meeting in two weeks. It showed U.S. employers hired more workers than expected last month, but also said the unemployment rate unexpectedly ticked up to 4.2% from 4.1%.

The Fed has been easing its main interest rate from a two-decade high since September to offer more help for the slowing job market, after bringing inflation nearly all the way down to its 2% target. Lower interest rates can ease the brakes off the economy, but they can also offer more fuel for inflation.

The S&P 500 has set an all-time high 57 times so far this year.

For now, the hope is that the job market can help U.S. shoppers continue to spend and keep the U.S. economy out of a recession that had earlier seemed inevitable after the Fed began hiking interest rates swiftly to crush inflation.

Retailers overall have been offering mixed signals on how resilient U.S. shoppers can remain amid the slowing job market and still-high prices. Target gave a dour forecast for the holiday shopping season, for example, while Walmart gave a much more encouraging outlook.

A report on Friday suggested sentiment among U.S. consumers may be improving more than economists expected. The preliminary reading from the University of Michigan’s survey hit its highest level in seven months. The survey found a surge in buying for some products as consumers tried to get ahead of possible increases in price due to higher tariffs that President-elect Donald Trump has threatened.

In tech, Hewlett Packard Enterprise jumped 10.6% for one of the S&P 500’s larger gains after reporting stronger profit and revenue than expected. Tech stocks were some of the market’s strongest this week, as Salesforce and other big companies talked up how much of a boost they’re getting from the artificial-intelligence boom.

In other dealings early Friday, Bitcoin was sitting near $99,600 after bursting above $103,000 to a record the day before.

U.S. benchmark crude oil gained 31 cents to $67.51 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, lost 7 cents to $71.05 per barrel.

The euro slipped to $1.0537 from $1.0561.

Source: AP

Risk Warnings and Disclaimers

Add to Favorites

Daily News

Remarks of Officials

Central Bank

Forex

FastBull Events

FastBull Featured

Devin

Mohammad Omar

Recent Searches

Top Searches

Markets

News

Analysis

User

24/7

Economic Calendar

Education

Data

Oil Prices Jump On Geopolitical Uncertainty But Demand Concerns Remain

Source: OILPRICE

London Pre-Open: Stocks to Edge Up; Central Bank Announcements Eyed

Source: Sharecast

Oil Prices Rise As Islamists Rebels Take Over Syria

Source: OILPRICE

Morning Bid: Markets Stay Steady Amid Rapid Shift in Syria

Source: Reuters

Commodity Market Outlook: December 2024

OPEC+ Strategy and U.S. Policy Shifts

Metals: Trade Disputes and Supply Challenges

Gold: Dual Drivers of Fear and Wealth

China’s Corn Market Under Pressure

More Questions Than Answers Post-NFP

Stock Market Today: Asian Shares Slide, With Korean Benchmark Down 2.5%, After Wall St Hits Records

Source: AP

Risk Disclosure