Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
Access both platforms from your single Saxo account.
Boxed in crude oil looking for a break
Ole Hansen
Head of Commodity Strategy
Summary: Crude oil has gone increasingly stale during the past week as opposing forces keep the market locked in a relative tight range. Traders have instead been looking to the U.S. stock market for inspiration and direction. On tap today the weekly inventory from the U.S. Energy Information Administration. The market will be looking for signs of a potential demand impact from rising infection numbers across the biggest fuel consuming states.
What is our trading focus?
OILUKSEP20 – Brent Crude Oil (September)
OILUSAUG20 – WTI Crude Oil (August)
XOP:arcx – Oil & Gas Exploration & Production
XLE:arcx – Energy Select Sector SPDR Fund (Large-cap US energy stocks)
____________________________________________________________________________________________________
Crude oil has gone increasingly stale during the past week as opposing forces keep the market locked in a relative tight range. Three days in a row the August WTI crude oil contract has settled within a 2 tick range, with most of the daily price action taking its cue from movements in the U.S. stock market. The wall of resistance the market has struggle to break above is $41/b, the low on Friday March 6 from where the market gaped lower in response to Saudi Arabia's short-lived price war and just before global demand collapsed.
Almost seven months after the Covid-19 became known outside of China several countries are considering the reintroduction of virus-control measures as the number of infected remains out of control. Not least in the U.S. where the three biggest fuel consuming states are struggling with a rising number of infected and deaths. With OPEC+ production cuts looking solid the market is instead focusing on and worried about the demand impact from the current infection surge.
The U.S. Independent holiday weekend normally signals the beginning of the summer driving season when refineries run flat out to meet demand for gasoline. So far the pick up has failed to emerge with GasBuddy estimating that demand during the holiday weekend was down by more than 22% compared with last year.
WTI crude oil is currently stuck in a tight $41/b to $37/b range and even tighter if focusing on the shown trendline which is currently providing support at $40/b.
Later today at 14:30 GMT the U.S. Energy Information Administration will publish its 'Weekly Petroleum Status Report'. The American Petroleum Institute in their weekly update last night raised the prospects for a bigger-than-expected rise in crude oil stocks while seeing a small reduction in gasoline stocks.
The market is likely to be focusing on the implied demand for gasoline and distillates as renewed weakness could lead to a price damaging continued counter seasonal rise in fuel stocks.
As per usual I will post the result and market reaction on my Twitter handle @ole_s_hansen.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer
The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.
Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)