HFM information and reviews
HFM
96%
Octa information and reviews
Octa
94%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%

Oil eases ahead of Lunar New Year


11 February 2021

Oil benchmarks are moderating at the time of writing, as markets await industry reports by the International Energy Agency (IEA) and OPEC respectively. Note that these reports come as oil markets have had a fabulous February thus far. Until today, Brent futures posted 8 consecutive days of gains and the active contract is still trading around its highest levels since July 2019, despite today’s drop. The global benchmark for oil prices has soared by nearly 11 percent on a month-to-date basis.

Meanwhile, crude oil is also moderating but remains near its highest levels since January 2020. WTI futures also wrapped up 8 straight days of gains, which was its longest winning streak since February 2019. With crude having advanced by over 11 percent so far this month, the US benchmark for oil prices now has the psychologically-important $60/bbl mark firmly in its sights.

However, note that both oil benchmarks have entered far into overbought territory, with their respective 14-day relative strength indexes having breached the 70 line. Such a technical indicator indicates that these prices are ripe for a pullback, even though the momentum (MACD) still points north.

What investors want to know from the IEA, OPEC reports?


The IEA and OPEC are both set to release their global estimates on supply and demand. Markets are eager to know whether these latest monthly reports, both due later today, can justify the optimism that has already been baked into oil prices.

As the vaccine continues being rolled out across major economies, despite complications in Europe and South Africa, such efforts have prompted investors to believe that economic conditions are firmly on the path towards recovery. As more of the global population is vaccinated, that should bring with it the easing of virus-curbing measures, the ramping up of factory production, as well as potentially more travelling and commutes; the resumption of these economic activities would mean more oil is consumed.

The soon-to-be-released reports by the IEA and OPEC have to uphold similar hopes for the global demand recovery, or risk unwinding some of the recent gains in oil prices.

Uncertainties still feature in demand outlook


For the time being, investors are having to digest some mixed signals out of major economies. China’s air traffic has seen a significant contraction ahead of the Lunar New Year. The week of 18 January, scheduled airline capacity was at 13 million. Two weeks later, that figure fell by 4 million seats, down to 9 million. At a time when billions of trips are typically made crisscrossing China for the festivities, many are staying put due to lingering concerns over the coronavirus. Although some 1.15 billion trips are still expected to take place during the 2021 Lunar New Year holidays, that’s still 60% lower than 2019’s tally, and also 20% lower than 2020’s figures.

Meanwhile, US crude stockpiles posted a much larger-than-expected drop last week, according to data by the US Energy Information Administration. US inventories fell by 6.65 million barrels, compared to market expectations for a decline of 800,000 barrels. However, demand for gasoline in the States last week was still lower by 10% compared to the same period in 2020.

Oil bulls pin hopes on Saudi support, US fiscal stimulus


At least oil bulls can take heart from Saudi Arabia’s incredible demonstration of its willingness and ability to spur prices higher. Earlier this year, it decided to deepen its supply cuts by 1 million barrels per day for February and March.

Such a bold move helped Brent futures to post a year-to-date climb of more than 17 percent while WTI futures have surged by almost 20 percent for the same period. OPEC+ will be meeting again in early March to decide on output levels for April.

Then there are expectations for more incoming US fiscal stimulus as well, which should help the world’s largest economy get back on its feet. As long as markets are not dissuaded from expecting more government financial aid for the US economy, that should help oil hold on to much of its gains.

#source

Share: Tweet this or Share on Facebook


Related

Yen stabilizes as Japan ramps up intervention warning
Yen stabilizes as Japan ramps up intervention warning

Threats of FX intervention help yen to stabilize near three-decade lows. Dollar and stocks take a step back, Bitcoin jumps in anticipation of halving. Shortage of liquidity could be an important market theme this week.

26 Mar 2024

Stocks at fresh records even as dollar bounces back
Stocks at fresh records even as dollar bounces back

Wall Street leads rally in equity markets, fuelled by rate cut optimism. US dollar stages surprise rebound amid US exceptionalism. Pound slides on BoE's dovish tilt, yen steadies, PBOC loosens grip on yuan.

22 Mar 2024

Dollar rises as Fed enters spotlight, yen plummets
Dollar rises as Fed enters spotlight, yen plummets

US dollar gains as traders brace for hawkish Fed. Yen tumbles despite BoJ's historic decision. Loonie slides on cooler than expected Canadian inflation. Wall Street gains ahead of Fed, oil extends advance.

20 Mar 2024

BoJ hikes, scraps yield curve control, but yen slumps

BoJ ends negative rates and yield curve control in historic move, but yen can't catch a break as Ueda signals ongoing accommodative stance.

19 Mar 2024

Dollar recovers, equities stall after US data releases
Dollar recovers, equities stall after US data releases

Dollar stages comeback as US data fuels speculation of fewer Fed cuts. Stocks and Bitcoin take a step back, oil climbs after Ukraine drone attacks. Yen traders play the guessing game ahead of next week's rate decision.

15 Mar 2024

US PPI and retail sales data enter the limelight
US PPI and retail sales data enter the limelight

After hot CPI inflation, dollar awaits PPI and retail sales data. Yen on the back foot as BoJ March hike bets decrease - S&P 500 and Nasdaq pull back, gold rebounds

14 Mar 2024


Forex Forecasts

MultiBank Group information and reviews
MultiBank Group
84%
XM information and reviews
XM
82%
FP Markets information and reviews
FP Markets
81%
FXTM information and reviews
FXTM
80%
AMarkets information and reviews
AMarkets
79%
BlackBull information and reviews
BlackBull
78%

© 2006-2024 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.