0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
GBP/USD
Bullish
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • USD/JPY is bucking the trend in USD weakness, tentatively putting it on a path towards higher levels. Get your $USDJPY technical analysis from @PaulRobinsonFX here: https://t.co/RnrBCFE3gt https://t.co/hTSdTcIwZY
  • The Canadian Dollar gained with government bond yields. Might USD/CAD find its way to current 2020 lows? Canada’s benchmark stock index, the TSX Composite, faces the March high.Get your $USDCAD market update from @ddubrovskyFX here:https://t.co/0Ba8E2S7vC https://t.co/JLUTzF6xlY
  • IG Client Sentiment is warning that the S&P 500, gold prices and AUD/USD could fall ahead as upside exposure accumulates. What are key technical levels to watch for next? Find out from @ddubrovskyFX here: https://t.co/YsBypn73vy https://t.co/erPb9HMRVc
  • The US Dollar could be readying to rise against the Singapore Dollar and Indonesian Rupiah ahead. Will USD/PHP and USD/MYR also follow this outlook? Find out from @ddubrovskyFX here: https://t.co/xvMPZha5SB https://t.co/P9QLmnY1Fg
  • The Euro has been struggling to maintain its upside momentum. Is EUR/USD readying to turn lower? EUR/AUD may be aiming to rise, but has EUR/CAD topped? Find out from @ddubrovskyFX here: https://t.co/vlJM3iQIYS https://t.co/8FGl10wDto
  • Third consecutive weekly gain in the #SP500 as of today's close, rising 0.63% #Fed balance sheet gained by 0.18% over the same period after shrinking -0.06% previously Generally speaking, the size of the b/s has remained more or less unchanged for a month https://t.co/0TrEA5RGmA
  • The outlook for gold might look a little tenuous at the moment, but this won’t be the first time a strong bull market has shown signs of a potential top due to short-term price action. Get your $XAUUSD technical analysis from @PaulRobinsonFX here: https://t.co/N8a84hRnHN https://t.co/jCEkFzCxEr
  • Well, I don't know who has had it worse this week: Barca or Kodak
  • GBP/USD is either treading water at resistance and is nearing a breakout or is working on developing a top. Get your $GBPUSD technical analysis from @PaulRobinsonFX here:https://t.co/RnrBCFE3gt https://t.co/bDWWjzT57m
  • Stop watching the Champions League game. The FX markets are still open
Crude Oil Declines after OPEC Meeting

Crude Oil Declines after OPEC Meeting

2014-11-27 19:42:00
John Kicklighter, Chief Strategist
Share:

Since hitting its 2015 peak in June, US crude prices had dropped more than 30 percent to below $75 per barrel through this week. That tumble was violently extended today when an OPEC (Organization of the Petroleum Exporting Countries) meeting ended without a reduction in output from the collective which produces approximately a third of the world’s oil supply.

Despite the steady and painful drop in energy prices heading into the meeting, expectations for a production cut were relatively low. According to reports, a few oil producing countries (including Venezuela and Nigeria) were calling for cuts. However, after the five hour meeting, the majority headed by Saudi Arabia would ultimately keep its production target at 30 million barrels per day.

The market reaction was swift. US-based WTI crude oil futures dropped as much as 8 percent from Wednesday’s close taking out $70 and driving the market to a more-than-four-year low in the process. Brent – the European standard for pricing – would suffer a drop of similar magnitude to comparable historical lows just above $70.

US Crude Oil Prices

Crude Oil Declines after OPEC Meeting

Charting Created by John Kicklighter usingMarketscope 2.0

The dramatic impact to this particular petroleum product would further carry broad ramifications for the entire ‘energy complex’. Natural gas, gasoline, heating oil and other similar commodities from the refined category would see heavy declines on the day. For the technical traders, this drop opens up a new area for analysis. Extending the nearly six-month bear trend this much significantly bolsters the case for a lasting bear trend. While each $5 mark moving lower stands out as a psychological level, heavy levels like $62, $55 and $50 carry in distinct weight.

US Crude Oil Prices

Crude Oil Declines after OPEC Meeting

Chart Created by John Kicklighter usingMarketscope 2.0

From a fundamental perspective, a drop in oil prices theoretically carries straight forward benefit for those countries that are major consumers while burdens those that are producers. While this will generally be the case, there are many complicating nuances. In the United States where a shale boom has significantly added to the supply glut and reduces the country’s import dependency, the drop in per barrel cost will eventually overwhelm exploration and mining investment costs that have been temporarily offset by hedged with a limited life. In Europe, this drop in energy prices will exacerbate – at least in the short-term – the dis-inflation pressures that the region’s policy officials are already trying to correct. In Russia, the hit to this vital revenue source exacerbates sanctions placed on the country by Western nations over the ongoing standoff over Ukraine.

Crude Oil Declines after OPEC Meeting

Chart Created by John Kicklighter using Data from Bloomberg

Further beyond the simple supply-and-demand implications, there is also a market sentiment aspect. It would seem that a drop in commodity prices would lead to freeing up investment capital and thereby a swell in financial market appetites. However, as the chart below shows, this is not typically the case. There is a ‘demand’ aspect that is engrained in oil prices as well, and a sustained drop of this magnitude would insinuate economic health is flagging. Moreover, in a world where various asset classes have enjoyed a highly correlated climb over the past five years as investors reach indiscriminately for yield, such a break may bode ill for market strenght – some would say ‘complacency’.

Crude Oil Declines after OPEC Meeting

Chart Created by John Kicklighter using Data from Bloomberg

The market implications of this oil change are not isolated to crude charts, nor are they broad fundamental connections. There are plenty of short-term influences to be find in the FX world and likely the capital markets when US liquidity returns for a shortened session tomorrow. Below, the Russian Ruble suffered for the price fall with the currency dropping to a fresh record low against the US Dollar (USDRUB high) on a three-day collapse.

Crude Oil Declines after OPEC Meeting

Chart Created by John Kicklighter usingTrading View on DailyFX.com

From a more liquid and less risky market (Russian authorities have positioned themselves so that they can intervene more effectively recently to ‘punish speculators’ should it be necessary), the Canadian Dollar would also put in for a sizable move. Below USDCAD surged over 100 pips after the news. Many ‘commodity bloc’ currencies showed the same outcome – including Europe’s concentrated producer, Norway.

Crude Oil Declines after OPEC Meeting

Chart Created by John Kicklighter usingTrading View on DailyFX.com

The spark of volatility following this update was certainly dramatic. However, considering the broader trend from crude over the past months and the fundamental imbalances growing behind the supply-and-demand dynamic, expect the energy market to be an important discussion point for the global markets – from Emerging Markets to Developed Markets to energy producers to energy consumers – going forward.

--- Written by: John Kicklighter, Chief Strategist for DailyFX.com

Follow me on twitter at http://www.twitter.com/JohnKicklighter

Sign up for John’s email distribution list, here.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.