Jump to content

Crude Oil Prices May Turn as Markets Weigh Inflation, Fed Outlook


MongiIG

Recommended Posts

CRUDE OIL OUTLOOK:

  • Crude oil price rally stalls as US jobs data flags ‘stagflation’ worries
  • Monetary policy bets in focus on upcoming Fed-speak, US CPI data
  • WTI advance stalled near $80/bbl, upward momentum may be fading

Crude Oil Prices May Turn as Markets Weigh Inflation, Fed Outlook

Crude oil prices retreated from a six-week high on Friday, tracking lower against a broadly risk-off backdrop after December’s US jobs report crossed the wires. Headline payrolls disappointed but wages grew at a faster pace than economists anticipated, even as the pace cooled a bit from the prior month.

That seemed to fuel familiar worries about sticky inflation coupled with moderating economic growth. In fact, PMI survey data suggests that US expansion has slowed significantly since peaking in May. Priced-in near- to medium-term inflation expectations have barely budged from 16-year highs.

Interestingly, this is even as shipping costs have sharply fallen. The benchmark Baltic Dry Index – which soared to the highest levels since the Great Recession last year amid supply chain disruptions – turned sharply lower in the third quarter to finish the year at pre-pandemic levels.

Together, this seems to imply that markets see inflation holding up even as the base effects from the onset of the Covid-19 pandemic fade and global commercial networks are mended. In fact, over the past three months, consensus 2022 US GDP growth forecasts notably fell while the price growth outlook firmed.

Worries about “stagflation” – a scenario where weakening growth and stubbornly high inflation pull Fed policy into opposing directions – have understandably inspired bouts of risk aversion. More of the same is a threat for sentiment-sensitive crude oil prices in the week ahead.

CRUDE OIL AT RISK AS FED OUTLOOK REMAINS IN FOCUS

Comments from Atlanta Fed President Bostic begin a busy week of scheduled chatter from US central bank officials. Confirmation hearings for Chair Powell and Vice Chair Brainard on Tuesday and Thursday respectively are highlights, but many more are on the docket. They may continue to drive a hawkish narrative.

On the data front, Wednesday’s release of December’s US CPI report is likely to take top billing. Core price growth is seen accelerating to 5.4 percent on-year, the fastest in 30 years. The headline number is seen hitting 7 percent on-year for the first time since 1982.

A bit of consolidation may be in store in the very near term however. Bellwether S&P 500 stock index futures have steadied amid a lull in fresh news-flow after Friday’s blood-letting, suggesting that markets may shift into consolidation mode for now until another potent catalyst presents itself later in the week.

 

CRUDE OIL TECHNICAL ANALYSIS

Prices stalled against resistance capped at 79.60, with very early signs of negative RSI divergence cautiously hinting that momentum might ebbing. Initial support is anchored at 75.27, with a break below that setting the stage for a test of the congestion zone running down into 72.52. Breaking resistance may clear the way to extend upward toward last year’s high at 85.41.

Crude Oil Prices May Turn as Markets Weigh Inflation, Fed Outlook

Crude oil price chart created using TradingView

CRUDE OIL TRADING RESOURCES

Written by Ilya Spivak, Head Strategist, APAC for DailyFX. 10th Jan 2022.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • ASX: COLES GROUP LIMITED. – COL Elliott Elliott Wave Technical Analysis TradingLounge (1D Chart) Greetings, Our Elliott Wave analysis today updates the Australian Stock Exchange (ASX) with COLES GROUP LIMITED. – COL. In our ASX Stocks Top 50 forecast service, we have accurately forecast a price decline from a high of around 17.15 down to around 16.00 at the current low. And we are now identifying COL could move higher in the short term outlook. ASX: COLES GROUP LIMITED. – COL Elliott Wave Technical Analysis   ASX: COLES GROUP LIMITED. – COL 1D Chart (Semilog Scale) Analysis Function: Counter trend (Minute degree, green) Mode: Corrective Structure: Double Zigzag Position: Wave (b)-purple of Wave ((y))-green Latest forecast: Accurate forecast Details: The short-term outlook indicates that wave ((y))-green is unfolding as a Zigzag, and wave (a)-purple has ended. Therefore, wave (b)-purple is expected to continue pushing lower, seeking support around 16.01 - 15.71 before wave (c)-purple returns to rise higher. Pushing higher off 17.15 would renew the bull market view. Invalidation point: 15.35       ASX: COLES GROUP LIMITED. – COL Elliott Wave Technical Analysis TradingLounge (4-Hour Chart) ASX: COLES GROUP LIMITED. – COL Elliott Wave Technical Analysis ASX: COLES GROUP LIMITED. – COL 4-Hour Chart Analysis Function: Counter trend (Minute degree, green) Mode: Motive Structure: Impulse Position: Wave (c)-purple of Wave ((y))-green Details: The shorter-term outlook suggests it appears the (b)-purple wave has bottomed, but a move higher than level 16.5 is needed to confirm this outlook. If this forecast is correct, wave (c)-purple will be opened to continue pushing higher, aiming for higher targets. Invalidation point: 15.37     Conclusion:   Our analysis, forecast of contextual trends, and short-term outlook for ASX: COLES GROUP LIMITED. – COL aim to provide readers with insights into the current market trends and how to capitalize on them effectively. We offer specific price points that act as validation or invalidation signals for our wave count, enhancing the confidence in our perspective. By combining these factors, we strive to offer readers the most objective and professional perspective on market trends.   Technical Analyst: Hua (Shane) Cuong, CEWA-M (Master’s Designation). Source : Tradinglounge.com get trial here!  
    • Mathews Darcy mentioned that the quarterly production report released by BHP Group recently showed strong performance in copper and iron ore businesses, but adverse weather conditions affected coal production. Despite the upward trends in copper and iron ore prices, the market response to the stock price of BHP was relatively subdued. This article will delve into the analysis of the quarterly report of BHP Group and discuss its impact on the stock market and the reactions of investors. Quarterly Performance and Market Response Mathews Darcy pointed out that despite price increases in copper and iron ore on Wednesday, the stock price of BHP only saw a slight growth after the quarterly report release, reflecting the tepid response of investors to the report. Particularly noteworthy is the decline in the stock price of BHP amidst significant overnight increases in copper and nickel prices and iron ore prices maintaining a six-week high. Additionally, Mathews Darcy noted that major brokerage firms have begun adjusting their ratings and price targets for BHP based on the latest quarterly data. Several brokerage reports indicate that despite strong demand for copper and iron ore, the overall performance of BHP did not meet market expectations, possibly due to production constraints in its coal division. Investment Strategies and Future Outlook Mathews Darcy advised that when considering BHP stock, investors should carefully analyze the performance of its various divisions and future market prospects. While price fluctuations in mineral resources offer profit opportunities for BHP, investors should also be aware of the potential impact of price fluctuations on company performance. Furthermore, paying attention to brokerage research reports and rating updates will help investors better understand market dynamics and potential investment risks. Mathews Darcy also emphasized the importance of diversified investments, especially in an industry facing price volatility and geopolitical risks. Diversifying investments among different resource stocks can effectively reduce the impact of single market fluctuations on the investment portfolio.
    • Gonna participate! Personally, I'm DCAing in this memecoin....
×
×
  • Create New...
us