2020-11-02 • Updated
We have seen WTI oil price drop to $35 right before the weekend breaking through local support levels. Today, it almost touched $34 bouncing back up to $34.5.
On the daily chart, these levels correspond to June lows and the pre-final-fall zone of March. Which factors are affecting the oil market now?
The oil market trembles on any “hard” news or period, be it good or bad – that’s just because it is more unstable than usual since the virus pushed it out of balance.
The current hit of the virus is seen as more significant than many estimated it to be. That’s presses on the expectations of the oil demand recovery.
Joe Biden is leading in the polls so far. Investors are factoring in this bigger probability into the oil prices now. His plan is to get Iran back to the nuclear accord. It comes with Iran’s 2mln barrels of oil added into the market daily. That will press on the price in the mid-term and will be a problem for OPEC.
On the other hand, Joe Biden plans to “transition” the energy sector from oil to renewable resources – that, in theory, may reduce US oil production, especially shale, and lift the prices in the long term to the joy of OPEC as well.
The oil price now reacts to a set of factors, and you cannot really know which factor comes to the front line at which moment, especially now (before/on the day of the election). After – at least, it will be clear, who the US president is, and one of the factors of uncertainty will be out. So be careful trading it – there may be more movement this week.
Earnings season is a crucial time for investors and analysts, as it provides insights into how well companies have performed over the past quarter and gives indications of their future earnings. In 2023, expectations for US Q1 earnings were low due to economic challenges and rising interest rates. Surprisingly, many companies beat these low expectations, with 75% of S&P 500 companies surpassing forecasts.
When I started trading stocks a few years ago, I often needed to pay more attention to my technical analysis skills and trust that the market would play fair according to my analysis. I have since discovered that the safer approach to trading stocks is to, more often than not, seek out investing opportunities - that is, catching stock commodities with a potential to rise.
The S&P 500 had a good week due to the impressive start of Q1 earnings and favorable inflation data. In March, the consumer price index rose 5%, lower than the previous month's 6%, and met economists' expectations.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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