Análisis de mercado diario

2020 kicked off with a spike to Oil prices, as a sudden escalation in geopolitical concerns permeated market sentiment following the US airstrike in Iraq. WTI crude briefly breached $63.80/bbl as it claimed a year-to-date gain of 3.26%, while Brent broke above $69.00/bbl before moderating its way to a 3.94% gain so far in 2020.

The heightened tensions in the region should keep Oil prices elevated over the near-term, as market participants brace for any further moves by either Iran or the US that could ramp up supply-side concerns. As such fears gather a bigger crowd, that could easily send Brent well above $70/bbl and WTI past $65/bbl.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

What goes up must come down. That famous saying is especially playing true when discussing the valuation of oil this week, with the commodity having declined a whopping 13% since the astonishing 20% climb in prices that made headlines around the world when financial markets resumed trading for the new week.

The main catalyst behind the losses on Tuesday were reports that Saudi Arabia will be able to resume production output close to levels expected prior to the attacks on Aramco production fields last weekend. While initially met by astonishing surprise from investors who expected the return to capacity would take months, this was later supported by Saudi Energy Minister Prince Abdulaziz bin Salman confirmation during a news conference in Jeddah that Saudi’s oil output will be fully back online by the end of September.

More optimism that production output will return to levels before the drone and missile attacks on Saudi Arabia before the end of September should encourage further declines in oil by the end of the week. It wouldn’t surprise me if Brent Crude prices edge closer to $60 from current valuation near $64 at the time of writing, while WTI Crude can fall as low as $56 from where it  trades currently, marginally below $59.

The next focus for investors monitoring the geopolitical environment is the expected press conference from a Saudi Defence Ministry spokesman later on Wednesday. Reports have circulated that the press conference will show evidence that Iran was involved in the Aramco attacks, while United States Secretary of State Mike Pompeo is also traveling to Abu Dhabi and Jeddah.

If evidence of Iran’s suspected involvement in the attacks on Saudi Arabia is provided and the US Secretary of State warns of repercussions, fears regarding a surge in political tensions in the region will escalate once again. While we have already seen in the past few days how sensitive oil prices can behave to geopolitical developments, if an escalation does flare up in the region, volatility can spread into other asset classes.

I myself will closely monitor the behavior of Gold, which has performed with unusually low levels of volatility since the events broke out this past weekend. 

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

The breaking development that transpired throughout the weekend, where attacks on Aramco Oil plants in Saudi Arabia could take away up to 5.7 million barrels per day from the Kingdom’s production has led to a flurry of views that the Oil price could spike as high as $100 over the coming weeks.

This view is encouraged by concerns that the attacks on Oil plants might provoke an intense escalation in a region that is already sensitive to geopolitics, but it is still not clear what caused these fires and how this happened, before deciding into a portfolio what impact this could have on valuations.

US WTI concluded the week just below $55 and to expect a move to $100 from here is ambitious, though confirmation that it will take weeks, and not days to replace this removal of Saudi production can encourage a move to $60.

Looking at the technicals on the Daily charts, Oil prices have suffered more than 3 days of successive declines and found short-term support at $54. As long as prices do not fall below $54 we can look for a rebound from recent declines.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

Asian equities and currencies are benefitting from the feel-good mood in the markets after US President Donald Trump and Chinese President Xi Jinping agreed to reignite trade talks. The Offshore Yuan is Asia’s best performer on Monday morning, climbing 0.6 percent against the US Dollar at the time of writing. Meanwhile, safe haven assets are losing ground on the ebbing risk aversion, with Gold falling below the psychological $1400 level, while the Japanese Yen weakened by some 0.3 percent to go back above the 108 level versus the Greenback.

The US-China truce announcement staves the risk off more tariffs being imposed over the immediate term on shipments between the world’s two largest economies, giving markets the go-ahead to push further into risk-on territory for the time being.

Will US-China trade talks ultimately lead to a concrete deal?

The resumption of US-China trade talks doesn’t necessarily mean a trade deal is imminent. While an immediate deterioration in US-China relations has been averted, for now at least, the tariffs already imposed on global trade are still in effect and are expected to continue weighing on global growth.

This US-China truce may merely offer markets a temporary high, as the announcement by both governments appears to kick the can down the road. The road towards a lasting US-China trade deal remains unclear, in light of the complexities and sensitivities encountered during negotiations from earlier this year. The risk of talks falling apart, or another flare-up in tensions, could still rear its ugly head at some point in the future, blindsiding investors yet again.

The trepidatious investor will be tempted to ponder whether the same script will play out again over the coming months. In the meantime, risk assets are expected to enjoy their time in the sun, until the storm clouds of US-led tensions darken market sentiment once again.

Oil leaps at prospects of OPEC+ supply cuts extension

Brent and WTI crude are on the verge of gaining two percent respectively at the time of writing, after Russia and Saudi Arabia agreed to restrain Oil supplies through the end of 2019 at least. The pact between two of the biggest producers within OPEC+ should pave the way for an official stance by the alliance to extend the output cuts campaign, as the group’s meeting in Vienna begins Monday.

Oil prices should enjoy some immediate relief given expectations of the OPEC+ production cuts extension, along with the positive sentiment accompanying the revival of US-China trade talks. While an official extension should strengthen the floor under Oil prices, the lingering concerns over slowing global demand growth may cap Oil’s upside, unless existing US-China tariffs are lifted to brighten the global economic outlook.

Markets will also be assessing whether OPEC+ efforts to rebalance the global Oil markets may be enough, in light of record US crude output, along with the risk of another flare-up in the US-China trade conflict which could drag global growth lower.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.

The Dollar was thrown an unexpected lifeline mid-week, as solid US data and a slightly more hawkish Federal Reserve dampened expectations of a rate cut in the near-term.

Investors were forced to re-evaluate the Federal Reserve’s monetary policy path for 2019 after Jerome Powell stated that lower inflation was “transitory”. With the recent string of positive data also easing concerns over the health of the US economy and boosting the Dollar’s safe-haven status, bulls are likely to remain in the driver’s seat in the near-term.

Today’s main risk event for the Dollar will be the all-important jobs report which should offer fresh insight into the health of the US labour force. Markets expect the US economy to have added 180k jobs in April, with wage growth projected to rise 0.3% month-on-month while the unemployment rate is anticipated to remain unchanged at 3.8%. While every element of the jobs report is important, there will be a special focus on wage growth which could shape interest rate expectations. Any signs of wage growth cooling could rekindle speculation over the Fed cutting interest rates – something that will punish the Dollar.

Looking at the technical picture, the Dollar Index (DXY) is trading marginally below 98.00 as of writing. A weekly close above this level may inject bulls with enough inspiration to attack 98.33.

Gold to continue testing $1,270 support line

Gold remains stuck in its bearish channel after Fed Chair Jerome Powell pushed back against calls for a US interest rate cut.

Such rhetoric has contributed to a firmer Dollar, which in turn is making it tougher for Gold to climb. The precious metal also remains suppressed by rising risk appetite, on news that a US-China trade deal may be sealed by next week, even though similar headlines have been oft-repeated in recent months. However, broader uncertainties over the global growth outlook may cushion Gold’s decline in the near-term, even as it continues to test the psychological $1,270 support level.

Commodity spotlight – WTI Oil

WTI Oil is on route to achieving two consecutive weeks of losses for the first time in 2019.

Despite US sanction waivers on Iran’s Oil being lifted this week, Oil prices continued to fall as US Crude inventories rose to their highest levels since 2017. This implies that OPEC+ producers have their work cut out in trying to rebalance global Oil markets and may extend the existing production cuts program past June, even as Russia failed to comply with targets set for April. Hence, the $60/bbl psychological level will be an important support in the immediate term, to see whether Oil bulls can regain control of the narrative and reverse the slump.

Exención de responsabilidad: El contenido de este artículo incluye opiniones personales, y no debe ser interpretado como asesoramiento sobre inversión personal y/o de otro tipo y/o una oferta y/o solicitud de ninguna transacción con instrumentos financieros y/o garantías y/o pronóstico de rendimiento futuro. ForexTime (FXTM), sus afiliados, agentes, directores, responsables y empleados no garantizan la precisión, validez, puntualidad o compleción de ninguna información o dato disponible, y no asume ninguna responsabilidad por cualquier pérdida que resulte de cualquier inversión realizada en base a ellos.