As we head toward the weekend, oil prices have turned sharply negative after starting the week on the front foot. Barring an unexpected rally later on today, oil prices are set to end a six-week winning streak. This would halt a rally that began a few months ago when oil prices found support after signs emerged that the US would reinstate economic sanctions on Iran and as crude output from some OPEC members fell, most notably Venezuela.
Yesterday’s roller coaster ride in the S&P 500 ended very favorably for the bull camp. What began as a solid open at 2730 quickly became a retest to Wednesday’s session low of 2704.50 after the White House announced the cancellation of the North Korea Summit. For us, the key to being a buyer on that pullback was that Treasury prices barely budged.
Yesterday’s FOMC Minutes brought exactly the lightbulb moment we not only expected but discussed at length since their meeting earlier this month. The only problem, how poor Eurozone growth and sentiment data has been. Even though the Federal Reserve has telegraphed that they are willing to let inflation run past their 2% target without forcing a faster pace of rate hikes, the dollar remains elevated.
Crude oil prices are under pressures as the Organization of the Petroleum Exporting Countries (OPEC) and NON-OPEC start laying the groundwork for a production increase and traders take profits ahead of the long holiday weekend.
Crude oil prices managed to recover some of their losses made in the immediate aftermath of EIA’s weekly crude inventories report which showed an unexpected build. Both Brent and WTI oil contracts remain near the multi-year highs they have hit recently.
The S&P 500 finished yesterday on very soft footing after again failing to hold ground above 2740 in what was the lowest volume session since the week of Christmas. Major benchmarks from across the globe are all lower this morning; the DAX is -1.5% and the Nikkei -1%.
Crude oil prices are under pressure after Present Donald Trump took away some of the growing optimism of a United States/Chinese trade deal, along with some non-sourced OPEC talk about raising oil production at their next June meeting and weaker than expected manufacturing data in Europe.