WTI bears on the prowl

7 December, 2016

WTI Crude was vulnerable to sharp losses on Tuesday following reports of OPEC’s output rising to a worrying record high of 34.19 million barrels per day in November which revived the oversupply concerns. It is becoming quite clear that the effects of last week’s expectation-defying production cut deal in Vienna is warring off as investors come to terms with the painful OPEC reality. For the cartel to bring production back down to the optimistic 32.5 mbpd in January after November’s high, a mammoth 1.7 million barrels will have to be trimmed which could be challenging. When keeping in mind countries such as Libya and Nigeria that are exempted from the limits of the latest agreement amid the record high outputs, concerns may mount over OPEC failing to fulfil the agreed production cut next year. There are still many unanswered questions and patches of uncertainty over how the cartel may solve this complicated production cut jigsaw consequently pressuring oil further.

Much attention may be directed towards the OPEC and Non-OPEC meeting on the 10th of December which could spark a selloff in oil if non-OPEC refuses to cut production by 600,000 barrels per day. Russia’s oil production continues to hit fresh post-Soviet highs while Russian officials have repeatedly stated that output cuts will be implemented moderately which could impact the pending deal. If pessimism persists over the production cuts and oversupply fears intensify then WTI bears could install another heavy round of selling. From a technical standpoint, bearish investors could exploit the breakdown below $50 to encourage a decline lower towards $48.50.

Sterling bears make a comeback 

Sterling relinquished short term gains on Tuesday with the GBPUSD sinking towards 1.265 after reports of the British government requesting parliament to honour its plan to divorce the European Union renewed the Brexit fears. The main theme driving the Sterling this year has been the ongoing Brexit saga with uncertainty and fears over the longer term impacts of Brexit to the UK economy diminishing investor attraction towards the currency. While bulls may be applauded on their ability to exploit the noise and optimism over Brexit being delayed to propel Sterling higher, the technical bounce should act as a firm foundation for sellers to drag prices lower. Investors may direct their attention towards the UK Manufacturing Production report which if exceeds expectations could provide bulls a slight lifeline. Although data from the UK continues to repeatedly display signs of economic stability, it has become clear that Brexit remains the main theme that has made Sterling sellers’ dream in the medium to longer term.


Source link  
Asian stocks unable to follow US market lead

Asian stocks are mostly lower, unable to keep in step with the S&P 500 that erased early losses to close higher on Thursday. US equities saw a boost...

WTO cuts outlook for global trade growth

A gloomy outlook is hanging over financial markets after the World Trade Organisation (WTO) joined the growing list of major institutions expressing concerns...

Trump’s impeachment inquiry is just a distraction

Investors were caught by surprise when the Speaker of the US House of Representatives Nancy Pelosi announced on Tuesday that...


Powell gives green light to interest rate cut

The S&P 500 reached a new milestone high on Wednesday breaking above 3000 for the first time ever as Fed Chair Jerome Powell...

Powell primes markets for July Fed rate cut

Fed chair Jerome Powell's latest dovish comments have removed market doubts over a US interest rate cut in July. Such signals have translated into...

Euro barely blinks on election results

The Euro has opened the new trading week marginally higher against the Greenback following initial results from the Parliamentary elections in Europe...


More bad news for Sterling as EURGBP

Backlash - that would be the word used to sum up the investor reaction from the latest attempt by UK Prime Minister Theresa May to push forward her...

EURJPY sinks to flash crash levels

A wave of risk aversion engulfed global equity and foreign exchange markets on Thursday after Donald Trump accused China of breaking...

US corporate earnings to drive global stock markets

Asian stocks, excluding Japan, are mixed on Monday, even after US stocks posted new record highs following the United States GDP report released at...

  


Share it on:   or