The dog days of August that have set in on the moves in the commodities have been exaggerated. While crude oil holds the 200-day moving average, after a major seasonal sell-off, the concerns about a serious demand slowdown are most likely overblown. Turkey, of course, is a major oil producer and Consumer. NOT! The fears of contagion, steaming from the stepped upped pressure from the Trump Administration, has been overdone. We are in the dog days, and oil bears have begun licking their chops, mistaking seasonal weakness for a major bear turn in the market.
After a rough start to the week, Asian stocks seem to have found some support as the Turkish Lira steadied below 7 per dollar. Japan’s Nikkei 225 rose 1.8% with all sectors in green territory as the Yen gave up some of yesterday’s gains. Australia’s ASX 200 and the Korean KOSPI also edged higher but gains were limited.
Even in long-term bull markets, you are going to have a day like Wednesday. Crude oil and products crashed down to major support as it was hit with a confluence of headlines and bearish weekly Energy Information Administration data. Fears of the impact of sanctions on China, Iran, Russia and Turkey did not help and another big drop in U.S. gasoline demand has some worried that U.S. consumers were showing resistance to higher pump prices.
Fears of a full-blown trade war between the world’s two biggest economies are set to intensify after the Trump Administration announced another round of tariffs on Chinese products on Tuesday. In a move that is likely to cause the further deterioration of US-China trade relations, the United States will begin imposing 25% tariffs on $16 billion of Chinese imports starting from Aug. 23. With Beijing expected to fight back by targeting $16 billion worth of U.S. goods with equal tariffs, the US-China trade saga could get even messier.
Asian stocks rallied on Tuesday, following a surge on Wall Street that sent the S&P 500 to a near all-time high and the Cboe’s Volatility Index to its lowest level since late January. The strong earnings season has been the key factor lifting U.S. stocks. With 24.1% earnings growth and more than 79% of S&P 500 companies managing to beat profit forecasts it looks to be the best earning season in recent history.
Crude oil prices are on the rise as President Donald Trump warns the world that anyone trading with Iran will not be trading with the United States. That pronouncement is directed at the European Union, which issued a statement Monday in Brussels saying, "We deeply regret the re-imposition of sanctions by the U.S., due to the latter's withdrawal from the Joint Comprehensive Plan of Action (JCPOA).
The U.S. petroleum markets were just trying to adjust to a surprise increase in U.S. crude supply, when The Wall Street Journal reported that the Trump Administration is considering more than doubling proposed tariffs on a further $200 billion worth of Chinese goods to 25%, up from an original 10% tariff that was put in place before.
Crude oil prices are back under pressure as there are reports that the United States is looking to more than double tariffs on China, as well as a shockingly bearish weekly inventory report from the American Petroleum Institute (API). Out of nowhere, the API reported a 5.590 million barrel build, confounding experts and expectations as well as a big 2.890-million-barrel increase in distillate supply. Gasoline did fall by 791,00 barrels but with trade war fears keeping us on edge, today's Energy Information Administration (EIA) supply report will be more important than today's Fed announcement.
Crude oil prices are on a wild ride. Oil prices rallied as hot rhetoric between the United States and Iran heated up. They sold off on data from Genscape that showed an 83,106 barrel increase in supply in Cushing, Okla., since Tuesday, and after reports of the return of some Libyan oil. Reports show that Waha oil production in Libya rose to 130,000 barrels a day from 100,000 barrels a day last week, as loading resumed at Es Sider port, according to Bloomberg.
Crude prices got whacked on oil supply, real and imagined. Talk of futures strategic petroleum reserve releases along with signs of real increases of production in some OPEC countries sent oil into the basement. Weak economic data out of China and some warnings about trade wars by the International Monetary Fund did not help and it overshadowed the reality that U.S. oil supplies will probably fall dramatically again this week.