In the last month of summer, the oil exchange rate is likely to show a correctionIn August, the oil price depends on several important factors - first of all, the recovery of the market in the United States and the new flare-up of the conflict in the Middle East. The Israeli authorities have accused Iran of attacking an oil tanker, and the United States and Great Britain have already promised support to Israel. Against this background, the oil exchange rate moved to growth after a short correction, but it is not known how long this recovery growth will be. We offer a traditional analysis of oil prices.Reducing unemployment in the United StatesIn many ways, the positive movement on the US stock markets has a positive effect on the oil exchange rate: the S&P 500 and NASDAQ 100 indices traditionally update historical highs. According to data from the US Department of Labor, the number of applications for unemployment benefits has fallen sharply.During the last week of July, only 385 thousand such appeals were registered, and the total number of recipients of benefits amounted to 3 million people. However, the effect of positive news from the US markets has already been played out, and the dynamics of the oil exchange rate will need new incentives to continue growth.At the same time, macroeconomic statistics from the United States show an increase in the commodity deficit, which increased from $71 billion in May to $75.7 billion in June. This was largely due to a 2.1% increase in imports compared to the previous month, although exports increased by only 0.6%. This is largely due to a reduction in supplies, which in turn restricts production within the United States.There are already reports about how the spread of a new strain of coronavirus can affect the American economy. In particular, as the president of the Federal Reserve Bank of Minneapolis, Neil Kashkari, said, the new strain may slow down the recovery of the labor market. This completely contradicts the recent statement by Fed Chairman Jerome Powell, who assured analysts that the delta strain is not a risk to the American economy.Positive statistics on the labor market may force the Fed to change its approach to monetary policy and increase rates, as well as curtail the quantitative easing program. First of all, this will lead to a strengthening of the dollar, which in turn will affect the commodities denominated in the US currency. In this case, the oil exchange rate will be influenced by another important negative factor. Moreover, investors will begin to withdraw resources from risky assets, and then the Russian and Chinese stock markets will suffer.Already half of the US states have stopped paying increased unemployment benefits, which on the one hand indicates that there is no need for additional incentives, and on the other hand may mean an increase in demand for fuel. However, in any case, the statistics on the labor market in the United States may not be as positive as it may seem at first glance - the number of jobs outside agriculture, on the contrary, turned out to be less than a year earlier. First of all, this was caused by a large number of dismissals in the field of higher education.Read more: The history of Federal Reserve (Fed) and its functionsThe influence of China and RussiaAn increase in oil purchases from China can potentially act as a new incentive for the hydrocarbon market. So, China may soon announce an increase in quotas for the purchase of hydrocarbons. Moreover, it is expected that more oil will be purchased not only by small refineries from China, but also by large Chinese companies.The main seller of oil on the Chinese market is the Arab countries from the Persian Gulf, so first, most likely, prices for Dubai grade oil will rise sharply, and other grades, including the benchmark Brent, will follow it. However, these expectations are contradicted by the increase in the incidence of coronavirus in China - due to lockdowns and restrictive measures, traffic on some of the most important logistics routes is reduced.Moreover, the Chinese authorities have decided to restrict air and rail travel around the country. In the Asian region, the number of infected people has been growing recently. In particular, in Thailand, even new restrictive measures did not help to stop the increase in new cases. Similarly, in Sydney, Australia, the increase in new cases has reached a historic high, and the authorities expect the situation to worsen further.In turn, Russian oil companies are trying to use the OPEC+ deal to get more favorable working conditions inside the country. In particular, they suggested that the government reduce the tax burden on the industry, which in turn will help start the development of hard-to-reach oil. To do this, they proposed to create two new groups of deposits, for which they proposed to reset the tax on mineral extraction.The first group includes areas with the volume of initial reserves of less than 65 million tons and the degree of depletion of less than 1%. The second group includes the deposits of ultra-viscous oil in the Komi Republic. Moreover, the oil companies decided to stimulate the exploration of hard-to-recover reserves. To do this, it is proposed to use a traditional set of tools - tax deductions and reduction of payments for the mineral extraction tax. However, so far the Ministry of Finance is against the initiative, which is not eager to help oil companies and does not plan to change the taxation of the industry until 2023-2024, until the end of the OPEC+ agreement.At the same time, the further deterioration of the pandemic situation in the world may become a deterrent to the growth of oil prices. Recently, in order to combat the spread of a new delta strain of coronavirus, an increasing number of countries have been strengthening restrictive measures on the mobility of the population. Investors are particularly concerned about the situation in China, where domestic air and rail traffic was limited in order to localize outbreaks of the disease, which directly affects the oil exchange rate.Oil price analysisOil futures moved into the negative zone, without reaching the goals of a short-term rebound. These levels are located near the $73.50 and $71.50 marks, which corresponds to the average Bollinger bands on the daily chart. In general, the oil exchange rate is affected by downward pressure, and analysts are increasingly inclined to believe that a correction may occur in the hydrocarbon market in the near future. The support lines are located near the previous lows - around $70.20 and $67.50, according to the technical analysis of oil prices.Read more: What are futures: types, features, advantages and risksIn the first week of August, the dynamics of the oil exchange rate showed a failure-from about $75 to $70 literally from August 2 to 5. The reason for the increase is quite banal - the growth of fuel reserves in the American market, which indicates a decrease in economic activity. According to official data, inventories increased by 3.6 million barrels, while a decrease of 3.9 million barrels was expected. Moreover, analysts are influenced by data on the spread of a new strain of coronavirus in China, the United States and Japan, as well as the associated expectations of new restrictions.The most important factor that positively affects the dynamics of the oil exchange rate remains the growth of tensions in the Middle East. The conflict between Israel on the one hand and Iran and Lebanon on the other threatens the rapid exit of hydrocarbons from the Islamic Republic to foreign markets, as well as generally increases the uncertainty of oil transportation from the Middle East. As a result, literally in one day on August 5, the oil exchange rate recovered to $71 per barrel, and the next day it was already testing the level of $72 per barrel.A new conflict in the Middle East may become a significant factor that is likely to affect the oil price in August. According to Israeli Defense Minister Beni Gantz, his country is ready to start a war against Iran because of a drone strike on an oil tanker. We are talking about the attack on the Mercer Street oil tanker.Officially, the ship belongs to Japan, sails under the flag of Liberia, but it is operated by the Israeli company Zodiac Maritime. According to Gantz, the Islamic Republic has no more than two and a half months to come close to producing nuclear weapons. In this context, the attack on an Israeli tanker becomes part of a large-scale confrontation in the region. If the tension increases, the oil exchange rate may receive additional support.In turn, Israel has already received assistance from its traditional allies - the United States and Great Britain. As British Prime Minister Boris Johnson hastened to say, " Iran must answer for the consequences." In turn, the representative of the Iranian Foreign Ministry, Saeed Khatibzadeh, said that the Islamic Republic is ready to protect its security and national interests. US Secretary of State Anthony Blinken also joined the diplomatic skirmish, saying that Tehran was undoubtedly behind the attack, and the allies would prepare a "collective response" to this attack.Thus, two multidirectional factors: the strengthening of anti-bullying measures and the growing conflict in the Middle East are pushing the trajectory of the oil exchange rate in different directions. If the first factor leads to a reduction in demand, the second one seriously reduces the supply of oil - it is the Middle East conflicts that traditionally push the cost of hydrocarbons up. According to most analysts, the combination of two multidirectional factors can cause the oil exchange rate to fluctuate in a wide range from $68 to $75 per Brent, depending on the news background.Read more: Are the minutes of the Federal Reserve meetings useful for ...
EUR/USD: the market is preparing for the ECB's decision to lower key ratesThe EUR/USD pair shows a multidirectional movement, trading around the 1.0520 mark. Market activity remains low, as traders are waiting for the publication of key data on inflation in the United States, which may set the tone for further dynamics of the instrument.Tomorrow at 15:15 (GMT+2), the European Central Bank (ECB) plans to announce a reduction in three main interest rates — key, margin and deposit — by 25 basis points, bringing them to 3.15%, 3.00% and 3.40%, respectively. These measures are due to a slowdown in growth in major eurozone economies such as Germany and France, where business sentiment continues to remain low. The problems are most acute in the manufacturing and service sectors. However, experts emphasize that the current monetary policy of the ECB has an impact: inflation in the eurozone remains controlled. In November, the consumer price index rose from 2.0% to 2.3% in annual terms, in line with forecasts, and on a monthly basis it decreased by 0.3% after a similar increase a month earlier. The underlying indicator also strengthened to 2.8% year-on-year, despite a decrease in monthly terms. ECB President Christine Lagarde will hold a press conference at 17:15 (GMT+2), where she will announce the results of the meeting and, possibly, share forecasts for the further development of the region's economy. Market participants are waiting for her comments on the strategy of the financial authorities against the background of continuing global uncertainty and prospects for subsequent easing of monetary policy.Resistance levels: 1.0554, 1.0600, 1.0629, 1.0665.Support levels: 1.0500, 1.0450, 1.0400, 1.0350.USD/CHF: November inflation in the United States may become a driver for the pairThe USD/CHF pair continues to adjust, trading near the 0.8836 mark, against the background of the publication of neutral macroeconomic data.The Swiss consumer price index in November decreased by 0.1% month-on-month and rose from 0.6% to 0.7% year-on-year, remaining at minimum levels among the G10 countries. This is significantly below the target range of 0.0–2.0% indicated by the Swiss National Bank. As a result, experts are increasingly confident in the continuation of monetary policy easing: at the December 12 meeting, the interest rate is expected to decrease by 25 basis points to 0.75%. Forecasts suggest that by the end of 2025, the rate may drop to the range of 0.00–0.25%.The US dollar remains stable, trading around the 106.00 mark in USDX, in anticipation of November inflation data, which will be released today at 15:30 (GMT+2). The general consumer price index is expected to grow from 2.6% to 2.7% in annual terms and from 0.2% to 0.3% on a monthly basis. Core inflation, excluding food and energy prices, is likely to remain at 3.3% year-on-year and 0.3% month-on-month. Such data may support further Fed rate cuts of 25 basis points in December, however, the regulator may consider the possibility of a pause in policy easing early next year, given the risk of accelerating inflation under the influence of economic reforms of the administration of President-elect Donald Trump.Resistance levels: 0.8860, 0.9000.Support levels: 0.8800, 0.8680.USD/JPY: the pair maintains positions below the key zone of 157.70–152.00The USD/JPY pair shows sideways dynamics in the area of 151.54, where the yen is trying to strengthen its position against the background of a neutral movement of the US currency and expectations of a tightening policy by the Bank of Japan at the upcoming meeting.After the publication of key macroeconomic indicators, including data on the labor market and inflation, Japan's gross domestic product (GDP) in the third quarter reduced its growth rate from 0.5% to 0.3%, which coincided with analysts' expectations and confirmed the stability of the economy. Judging by the latest comments, the Bank of Japan may raise the interest rate at its meeting on December 19. Additionally, the price index for corporate goods in November remained at 0.3% month-on-month, while the annual rate increased from 3.6% to 3.7%. However, preliminary statistics on orders in mechanical engineering showed a sharp slowdown from 9.3% to 3.0%, reflecting the pressure of geopolitical factors and a decrease in foreign demand. The decision of the Bank of Japan will largely depend on the results of the meeting of the US Federal Reserve System scheduled for December 17-18. If the US regulator leaves the rate unchanged or reduces it by 25 basis points, the probability of raising the Japanese rate by a similar amount will increase significantly.Resistance levels: 152.40, 155.40.Support levels: 150.60, 146.90.Oil market analysisDuring morning trading, WTI Crude Oil demonstrates the strengthening of the "bullish" momentum that began at the beginning of the week. Quotes reached the level of 68.70, trying to overcome it against the background of stabilization of the situation in Syria, which previously could have caused disruptions in the supply of raw materials. At the same time, the projected growth in fuel demand in China next year has a restraining effect on the downward trend. Meanwhile, representatives of Saudi Aramco, the largest oil exporter, reported a decrease in supply prices for Asian countries in January 2025 to the lowest values since the beginning of 2021, due to weakening demand from China.Today at 15:30 (GMT+2), the market expects the publication of inflation data in the United States. Forecasts suggest an increase in the consumer price index in annual terms from 2.6% to 2.7% and on a monthly basis from 0.2% to 0.3%. The basic indicator, excluding volatile categories of goods, may remain at the level of 3.3% year—on-year and 0.3% month-on-month. Analysts believe that these data are unlikely to change current expectations for a 25 basis point interest rate cut by the US Federal Reserve at its December 17-18 meeting. According to the FedWatch Tool, the probability of such an outcome is estimated at 90.0%.Additionally, the attention of market participants is focused on data from the American Petroleum Institute (API), which recorded an increase in oil reserves for the week from 1,232 million to 0.499 million barrels, with a forecast decrease of 1.3 million barrels. Today at 17:30 (GMT+2), the Energy Information Administration (EIA) will publish its report: reserves are projected to decrease by 1.3 million barrels after falling by 5.073 million barrels earlier. The EIA also adjusted production forecasts: for 2023, the value was increased by 10 thousand barrels per day to 13.24 million, and for 2025, it was reduced by the same amount to 13.52 million barrels per day. The demand for oil, according to the ministry, this year decreased by 100 thousand barrels per day to 103.03 million, and the forecast for 2025 was reduced by 30 thousand barrels per day to 104.32 million.Resistance levels: 69.06, 69.47, 70.00, 71.00.Support levels: 68.30, 67.53, 67.00, ...
USD/CHF: breakout of 0.8920 will open the way to July peaksLast week, the USD/CHF pair tested the support level of 0.8755 during the correction, after which it began a reversal and is trying to develop an upward momentum.The US currency was supported by positive macroeconomic data: the number of people employed in the non-agricultural sector increased from 36.0 thousand to 227.0 thousand in November, which significantly exceeded analysts' forecasts of 202.0 thousand. The unemployment rate was expected to remain at 4.2%, and the average hourly wage increased by 0.4% on a monthly basis, which is better than expectations of 0.3%. These indicators strengthen the likelihood of a more cautious approach by the US Federal Reserve to further monetary policy easing.The Swiss franc weakened its position after the publication of inflation data for November. The consumer price index for the month decreased by 0.1%, and in annual terms it was fixed at 0.7%, which turned out to be lower than the projected 0.8%. As a result, the Swiss National Bank may continue to ease monetary policy. The head of the regulator, Martin Schlegel, previously announced his readiness to consider the possibility of reducing the interest rate to negative values in order to reduce the attractiveness of the franc as a safe haven asset.Resistance levels: 0.8920, 0.9050.Support levels: 0.8755, 0.8625.USD/JPY: Japan's GDP data surpassed forecastsThe USD/JPY pair shows multidirectional fluctuations, remaining around the 149.85 mark. The main attention of market participants is focused on macroeconomic data from Japan, which, despite its positive nature, does not have a significant impact on the dynamics of the asset.In the third quarter, the Japanese economy showed GDP growth from 0.2% to 0.3% in quarterly terms and from 0.9% to 1.2% annually. However, the GDP deflator slowed from 2.6% to 2.4%, indicating a decrease in inflation expectations, which may complicate the tasks of the Bank of Japan to tighten monetary policy. Business activity indicators also turned out to be higher than expected: the Eco Watchers current situation index rose from 47.5 points to 49.4 points, and the forecast for the development of events reached a similar value, exceeding the previous result of 48.3 points.The data released on Friday turned out to be mixed. The index of leading indicators decreased from 108.9 to 108.6 points, while the index of matching indicators strengthened to 116.5 points. Household spending fell by 1.3% in October, which is better than the projected decline of 2.6%. At the same time, wage growth accelerated to 2.6%, raising expectations about inflation. Against this background, Toyoaki Nakamura, a member of the Board of the Bank of Japan, stressed the need to take into account the dynamics of salaries and business sentiment of Tankan when making decisions on possible changes in interest rates. Market participants took these statements as a "hawkish" signal, which was reflected in the growth in the yield of 10-year bonds, which increased to 1.065%.Resistance levels: 150.00, 150.50, 151.50, 152.22.Support levels: 149.35, 148.64, 148.00, 147.00.Gold market analysisGold shows a smooth decline, falling back to the level of 2640.00 and testing it for a breakdown downwards. Despite the limited number of factors that can radically change the situation in the market, investor activity remains high, which is due to the analysis of Friday's data on the American labor market.Recall that in November, the US economy created 227.0 thousand new jobs outside the agricultural sector, which significantly exceeds the revised October figures of 36.0 thousand (previously 12.0 thousand) and analysts' forecasts of 200.0 thousand. The unemployment rate increased from 4.1% to 4.2%, in line with expectations, while the average hourly wage remained at 4.0% year-on-year, higher than the forecast of 3.9%, and amounted to 0.4% month-on-month with expectations of 0.3%. Although the data cannot be called unambiguously positive, market participants regarded them as a signal of a possible continuation of the easing of the Federal Reserve's policy at the December meeting.According to the latest data from the CME Group FedWatch Tool, the probability of a Fed rate cut by 25 basis points in December rose to 87.0%, whereas a week ago it did not exceed 70.0%. An additional confirmation of positive expectations was the growth of the consumer confidence index from the University of Michigan from 71.8 points in November to 74.0 points in December, which turned out to be higher than both the results of the previous month and preliminary forecasts of 73.0 points.Resistance levels: 2655.00, 2670.00, 2685.56, 2700.00.Support levels: 2630.00, 2613.50, 2600.00, 2589.61.Crude Oil market analysisWTI Crude Oil prices are approaching the 67.00 mark, maintaining a downward trend in the global market. This movement is due to the expectations of market participants that OPEC+ will extend the current restrictions on oil production for another three months.The decision to maintain the cuts is related to the cartel's desire to avoid instability in the winter. During this time, the organization's member countries plan to resolve issues related to incomplete fulfillment of obligations, after which the situation with global demand, especially from China, will become clearer. Experts note that the slowdown in China's economic growth this year has had a negative impact on energy consumption. In addition, the country's gradual transition to electric cars continues to reduce demand for traditional hydrocarbons.This week, the attention of market participants will be focused on data on oil reserves. According to forecasts, the report of the American Petroleum Institute (API) will indicate an increase in reserves by 1,232 million barrels, as it was a week earlier, and statistics from the Energy Information Administration (EIA) will show an increase of 1,400 million barrels, which will be a noticeable contrast after a decrease of 5,073 million barrels in the previous period.Resistance levels: 68.10, 71.80.Support levels: 66.50, ...
EUR/USD: investors' attention is focused on the crisis in FranceThe EUR/USD pair is correcting near the 1.0509 mark, demonstrating a decrease in interest in the US dollar, but at the same time not receiving sufficient support from the macroeconomic data of the eurozone.According to forecasts, the November index of business activity in the Spanish services sector will decrease from 54.9 points to 53.6 points, in Italy from 52.4 points to 51.1 points, in France from 48.1 points to 44.8 points, and in Germany from 51.6 points to 49.4 points. These data indicate a slowdown in economic activity even against the background of interest rate cuts by the European Central Bank (ECB) aimed at supporting businesses and reducing debt pressure. The combined indicator of business activity in the eurozone is likely to decrease from 51.6 points to 49.2 points, which will take it out of the positive zone for the first time since the beginning of the year.Investors' attention is also focused on the political situation in France, where Prime Minister Michel Barnier, bypassing parliament, is promoting a bill providing for an increase in the tax burden on businesses by $ 62.8 billion and a reduction in government spending by $ 42.0 billion in order to reduce the budget deficit of 6.1% of GDP. This step caused sharp dissatisfaction with the opposition, which initiated the procedure for passing a vote of no confidence in the government. The escalating crisis risks exacerbating the already difficult situation of the national economy, which continues to struggle with high inflationary pressures.Support levels: 1.0460, 1.0330.Resistance levels: 1.0540, 1.0680.NZD/USD: construction statistics brought down NZD positionsThe NZD/USD pair started the week with negative dynamics, holding around 0.5860 after the publication of fresh macroeconomic statistics from New Zealand.According to the report, in October, the number of construction permits issued fell by 5.2%, which is significantly worse than the forecast of 1.7%. The previous value was also revised downwards from 2.6% to 2.4%. Such data reinforce concerns about a slowdown in economic growth and a possible negative impact on gross domestic product (GDP). In the current situation, experts predict that the Reserve Bank of New Zealand (RBNZ) may consider options for lowering interest rates to stimulate business activity, which puts pressure on the national currency. However, there are also positive signals: trading conditions improved from 2.1% to 2.4% in the third quarter, which turned out to be higher than analysts' expectations at 1.8%. This factor can provide short-term support to the New Zealand dollar, deterring it from a deeper decline until additional catalysts appear on the market.Resistance levels: 0.6035, 0.6120, 0.6220.Support levels: 0.5860, 0.5800, 0.5600.Silver market analysisAfter a long period of decline, the XAG/USD pair is showing recovery and is holding at 31.06 during trading in the Asian session. However, there is no confident upward momentum yet.One of the main limiting factors remains the decline in interest in silver, both in the form of contracts and in the form of physical metal, which is in demand in industry. According to the Silver Institute, in 2024, the volume of investments in this asset may decrease by 15.0%, reaching only $ 208.0 million. The decline is particularly noticeable in the US market, where sales of investment bars and coins fell by 40.0%, which is the lowest since 2019. The reason for this trend may be both a reduction in the financial capabilities of market participants and their preference for more active instruments such as gold or oil. Nevertheless, certain positive trends persist. In particular, industrial demand for silver will increase by 7.0% this year, and investments in exchange-traded funds (ETFs) backed by this metal will grow by 8.0%. This growth will be the first improvement since 2020, indicating a recovery in interest from long-term investors and the industrial sector.Resistance levels: 31.40, 33.00.Support levels: 30.50, 28.70.Oil market analysisWTI Crude Oil prices continue to move towards the important 70.00 mark, supporting the optimistic mood in the global commodity markets. The weakening of the US dollar has become a key driver of the current positive dynamics, which helps attract investors to energy purchases.The focus of market participants is on the meeting of OPEC+ ministers scheduled for Thursday at 12:00 (GMT+2). It is expected that the cartel members will again be unable to come to an agreement on increasing oil production, postponing this decision for the third time in a row for a maximum period of three months. The previous adjustment of production volumes, scheduled for December and amounting to 180.0 thousand barrels per day, was also postponed from October. This uncertainty is related to the variability in the forecast of global demand for hydrocarbons, especially against the background of slowing economic growth in key consumer countries. Special attention is paid to China, where economic difficulties have been observed since the beginning of autumn, but their mitigation has been accompanied by the country's active transition to electric transport, which reduces oil consumption. This process, although gradual, is already having an impact on the market. According to Reuters analysts, Chinese oil companies predict a further decline in demand for raw materials, as electric vehicles continue to displace gasoline-powered vehicles.Resistance levels: 71.20, 74.10.Support levels: 68.60, ...
EUR/USD: ECB representative Mario Centeno called for a neutral rate levelThe EUR/USD pair shows indecisive dynamics, remaining near the level of 1.0480. Activity in the market remains moderate after stormy trading, which did not lead to significant changes in quotations. Yesterday's rise in the euro was due to statements by Donald Trump, who won the US presidential election, about his readiness to increase import duties on goods from China, Mexico and Canada, but without mentioning the European Union. This has led to speculation about a possible softening of his pre-election position on trade with the EU.Investors are focused on statements by representatives of the European Central Bank (ECB). Mario Centeno, a member of the Board of Governors, expressed the opinion that the interest rate should be returned to a neutral range, optimally decreasing to 2.0% in moderate steps of 25 basis points. However, Centeno also admitted the possibility of a more aggressive rate cut in December to support economic activity in the region. According to him, such measures will help bring inflation closer to the target level below 2.0%, which confirms the effectiveness of the current monetary policy. Most analysts share this opinion, believing that the rate may be reduced to 3.00% at the upcoming ECB meeting. Such a decision is expected against the background of the ongoing recession in the manufacturing sector: the business activity index fell from 46.0 to 45.2 points in November, although analysts predicted it would remain at the same level.Resistance levels: 1.0500, 1.0530, 1.0561, 1.0600.Support levels: 1.0450, 1.0400, 1.0350, 1.0300.GBP/USD: the pound quotes are preparing to riseThe decline in the GBP/USD pair slowed down in the range of 1.2505–1.2480, which is due to profit-taking on short positions opened during October and November, as well as the publication of unfavorable macroeconomic statistics from the United States.According to the Conference Board, in November, the consumer confidence index fell to 111.7 points, which turned out to be slightly lower than the forecast of 111.8 points. Additional pressure was exerted by the October report on new home sales, which fell by 17.3% instead of the expected decline of 3.6%. This was the most significant drop since 2010: total sales amounted to 610.0 thousand against the projected 730.0 thousand. Given the importance of this sector to the economy, such a recession may slow down the growth of gross domestic product (GDP) The United States in the coming quarters.Against the background of the released British statistics, the pound received support. The consumer price index (CPI) rose to 2.3% year-on-year in October, exceeding analysts' forecasts (2.2%) and the previous value (1.7%). On a monthly basis, the indicator was 0.6%, reaching its highest since April, which increased inflation risks. Such dynamics may force the Bank of England to postpone the decision to reduce the interest rate at its meeting on December 19. On Friday, the market's attention will be focused on the publication of financial stability reports and minutes of the last meeting of the Bank of England, where hints can be given about the future course of monetary policy. Experts also expect that the volume of consumer lending will grow from 3.8 billion to 4.1 billion pounds, and the number of approved mortgage applications in October will decrease from 65,647 thousand to 64,100 thousand.Resistance levels: 1.2715, 1.2870, 1.3055.Support levels: 1.2480, 1.2322, 1.2058.USD/CAD: сorporate profit in Canada decreased by 2.5% in the third quarterDuring the Asian trading session, the USD/CAD pair shows a correction at the level of 1.4070. The Canadian dollar remains under pressure due to the weakness of the domestic economy, and the growth of the US currency supports a confident upward trend.According to Statistics Canada (StatsCan), the completed reporting period for the third quarter showed a decrease in net profit before tax (NIBT) by 2.5%, which is equivalent to a decrease of 4.1 billion Canadian dollars. As a result, the figure reached 157.4 billion Canadian dollars. The most noticeable slowdown is observed in the financial sector, where a decrease was recorded in ten of the thirteen industries, and total losses amounted to 5.5% or 2.5 billion Canadian dollars, which led to a result of 44.8 billion Canadian dollars. In the non-financial sector, 17 of the 39 subsectors also reported a drop in profits, by an average of 1.3% or 1.5 billion Canadian dollars, which reduced the total to 112.6 billion Canadian dollars.Resistance levels: 1.4100, 1.4250.Support levels: 1.4010, 1.3820.Oil market overviewQuotes of WTI Crude Oil continue to move within the long–term downward channel, however, consolidation has been observed within it for the second month in the sideways range of 67.19-71.88.Last week, the price rose from the lower boundary of this corridor to the level of 71.80, which was associated with increased geopolitical tensions. This happened after the US authorities approved the use of American weapons for strikes on Russian territory, which could potentially damage the oil infrastructure. However, on Monday, the price of oil fell again amid statements by US President-elect Donald Trump about plans to impose duties of 25% on all imported goods from Mexico and Canada, as well as an additional 10% on products supplied from China. Despite the fact that Canadian oil is likely to be exempt from restrictions due to its high importance, measures aimed at reducing Chinese exports increase concerns about a further decline in global oil demand. Additional pressure on the market is exerted by the truce announced today between Israel and the Lebanese organization Hezbollah. This interim agreement helps to reduce geopolitical tensions in the Middle East and reduces the risks of disruptions in the supply of hydrocarbons from the region.Resistance levels: 71.88, 75.00, 78.12.Support levels: 68.75, 65.62, ...
OPEC+ is markedly reducing oil production - in fact, the exporting countries will pump about 1 million barrels less per day. We have written earlier on why this is so.As a result, supply at the market has become lower, so prices have gone up and are approaching $100 per barrel again.What will the U.S. do after the OPEC+ statement?The coming energy crisis and the high inflation it causes are scaring the whole world, but it's the States that are worried the most right now:expensive oil means expensive fuel;it's causing prices of almost all commodities to rise;inflation is going up - the Fed keeps tightening policy;high key interest rates are pushing the U.S. closer to recession;in addition, high fuel prices can cause social discontent.To prevent this, the U.S. is trying to influence the largest oil producers and keep prices down. Otherwise, the Democrats will most likely not win the congressional elections. They are due in a month.The U.S. started to prepare in advance: President Biden flew to Saudi Arabia this summer and persuaded the U.S. to bring down oil prices. But it did not work out very well: OPEC acts in its own way and does not want to listen to Americans. As a result, the failed negotiations with the Saudis have further diminished the credibility of Biden and the Democrats' ability to influence oil, inflation and economic stability in the United States.However, the Biden administration is not giving up; they have a few more options - rather radical ones - on how to lower oil prices.Additional Oil ReleaseThe safest, though least effective, option is to further draw oil from strategic U.S. storage facilities. In response to OPEC+'s decision to cut production, Biden announced that the U.S. would release 10 million barrels of oil, even as storage reserves are depleted.That would be all well and good, but the announcement had little or no effect on oil prices, especially compared to the previous similar decision to release 180 million barrels to the market. No wonder: the volumes are not comparable.In addition, since U.S. storage reserves are running out, there is a risk that they will not be enough for a rainy day: in case of sharp reductions in domestic production (for example, during hurricanes in the Gulf of Mexico) or imports (if OPEC+ countries reduce exports).Reducing military aid to the ArabsDemocrats have drafted a "Tense Partnership" bill in response to OPEC+ and specifically the alliance's leaders, Saudi Arabia and the UAE. They are accused of "a hostile act against the United States" and "siding with Russia in the conflict with Ukraine."As revenge, the U.S. could withdraw its troops from these countries and stop supplying weapons and other military aid to fight neighboring states and terrorists. This includes protecting oil infrastructure from attack.This option also has disadvantages: without U.S. military support in these countries, there could be problems that would inevitably affect the global oil supply. After all, if military actions or terrorist attacks affect the oil fields or storage facilities of Saudi Aramco, oil will cost even more, and such attacks occur quite often.So even if the Saudis and the UAE will not reduce exports in response to the withdrawal of troops and reduction of arms supply, there is a good chance that sooner or later the fighting will make prices go up.In addition, Saudi Arabia has already planned to prepare for a possible conflict with the United States. For example, in the spring the Saudis said they were going to explore ways to move away from the petrodollar - that is, not to use bucks in the black gold trade. In this case, the demand for the dollar could fall dramatically, especially if other oil-exporting countries do the same.NOPEC: Conflict with OPEC+Amid disagreements with OPEC, the U.S. may return to the "oil production and export cartel law," NOPEC, to have more leverage on oil exporters.In this case, U.S. courts will be able to consider antitrust suits against OPEC+ and in general against countries involved in cartel collusion in the oil market. Under the decision of their own courts, the U.S. will be able to impose sanctions, confiscate property of these countries and put pressure on them in other ways. At the same time, the U.S. itself will indicate what is legal and what is not, thus assessing any actions of the countries that regulate oil production and prices.This option also has a disadvantage: sanctions on exporters would also hit the U.S. itself. If oil prices become lower, the U.S. oil industry will also be hard hit: domestic production will decrease and it will have to import more. And since the market is competitive, and the U.S. in this case will be "enemies of OPEC +", they will have to buy oil more expensive.So, even if the U.S. takes a drastic step - provoking a conflict with Saudi Arabia or the UAE, or starting a sanctions war with OPEC+ - all this will have a negative impact on themselves.Can't sanctions be lifted on Venezuela?As we can see, the U.S. has almost no normal options left to influence the oil market. Nevertheless, the U.S. says it is not going to remove sanctions from Venezuela yet, despite the fact that this would help get more oil on the market and lower oil prices. We may see some new rhetoric in this regard, but no change for now.The Iran deal has also been stalled so far: there is no news or movement on it. Although it is possible that disagreements with the Saudis may attract the U.S. to support Iran, because these are the two sides of the Arab conflict.On the one hand, Iranian oil would help to increase supply, but there is a nuance here as well: the reserves in this country are not grandiose, moreover, most of the oil is already exported in circumvention of sanctions.So what to do with Brent and WTI crude oil prices in 2022?If we discard all of the above options, then all we have to do is sit back and watch oil go up in price. The outlook is also bad: even if the world starts a recession and the demand for oil decreases, OPEC+ is already reducing production and adjusting to negative expectations, and also the supply from Russia may decrease if the embargo comes into force.And if that's the case, U.S. inflation will be high. And given the strong labor market, the Fed may raise the rate even more than 1.25% by the end of the year, and it is not certain that it will slow down next year as well. If rates remain high for a long time, the risk of recession in the U.S. is very high, and stocks and cryptocurrencies will have no fuel for growth. As a result, the economy will have a hard time: liquidity is scarce.If the U.S. starts to act sharply, the dollar is at risk: the "oil" countries can give it up to reduce dependence on the United States. But if the U.S. does nothing, tightening Fed policy will keep the dollar very strong - though at the cost of high inflation and recession. 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In 2019, the "sub-sanctioned" Iran began to increase oil supplies in circumvention of sanctions. Mostly tankers went to China and the Mediterranean: Syria and Turkey. And by the beginning of 2022, the fleet for transporting sanctioned Iranian and Venezuelan oil had tripled. It accounted for approximately 400 million barrels per year. And such a "ghost armada" successfully undermines the business of transport companies.Why did Iranian tankers get such a name?Last year, The Mail on Sunday reported: 123 Iranian vessels circumvent sanctions on oil trade. They change their location to GPS and create the appearance that they are anchored at sea, but at this time they are loading/unloading at the port. They also actively forge documents, use flags of different countries, disable identification systems and use front companies. Oil is often loaded onto several vessels and mixed before reaching its destination. This is also the case with "toxic" Russian oil.At the same time, Iran has a whole "underground" financial system for trade bypassing sanctions, writes the WSJ. It includes accounts in foreign banks, intermediary companies outside the country and firms that coordinate prohibited trade. The annual turnover is estimated at tens of billions of dollars.And Iranian banks attract affiliated firms to manage trade under sanctions. They register "daughters" outside the country, become trusted for Iranian traders, and then trade with foreign buyers of Iranian oil in foreign currency through accounts in foreign banks.Will the "Iranian Armada" help Russia?She is already helping her to circumvent sanctions, writes the Daily Mail. The international non-profit organization United Against Nuclear Iran (UANI) accuses the Iranian navy of cooperating with Russian oil companies. Allegedly, Russian oilmen are using "Tehran's black market vessels" to circumvent the export ban. And the US, the EU and the UK are even calling for the formation of a team of "ghostbusters".At least 5 Iranian "ghost armadas" are transporting oil from Russia to China and India, according to UANI. And recently, the WSJ reported that Zamanoil from the UAE was linking Iranian and Russian oil workers. The US Treasury accused her of working with the Russian government and Rosneft on the supply of Iranian oil to Europe.However, at the end of March, Iran denied a "secret offer from Russia" to help it circumvent sanctions in exchange for support in concluding a nuclear deal. And in May, he noted that he could not be a competitor of Russia in the global oil and gas market. The country has its own regular customers, and Iran sells the maximum amount of oil.So officially, Iran does not seem to be planning to use its "army of ghosts" to help for the benefit of Russia, despite the fact that these countries have "converged" before. But then there was no question of an embargo on Russian oil and there was no ban on ship insurance. In the new reality, the actions of the "ghost armada" are quite difficult to ...
At the morning trading on Tuesday, oil prices are declining. By 7.42 GMT, Brent oil fell to 72 dollars 85 cents per barrel, or by 0.05% compared to the closing price of trading the day before. The price of WTI oil fell to 71 dollars 22 cents per barrel, or 0.06%. Pressure on oil prices is exerted by information about the deterioration of the epidemiological situation in Asian countries. In this region, there is an increase in the number of infections with a new strain of coronavirus infection "delta". The authorities of a number of Asian countries were forced to tighten restrictive measures, including on movement. Analysts at Commonwealth Bank Of Australia note that the spread of the delta strain around the world will become a serious threat to the recovery of oil demand. Mobility restrictions are already being observed in some parts of the Asian region. This is the reason for the fall in oil demand. More than 60% of the world's oil consumption is accounted for by ...