Oil commentary - 27th May 2024
Morning all. Before we start all things oily, I’m absolutely disgusted with my local electronics distributor. I just bought a brand new 75” TV to watch the Premier League, but it came with no Leeds! Ohhhh, the humanity! Moving on, I hope everyone had a good MPGC week, had a good weekend and to all those celebrating, I hope you are enjoying a long weekend today. That’s a nice cheerful start to the week, huh? Well, not if you’re from West Yorkshire and like Football, of course. On that note, let’s talk about other things not so cheerful, shall we? Oil markets. Brent is trading this morning at $82.35 up 0.23 and WTi is trading up 0.29. Esshh, Brent hit a low of $80.65 on Friday before the bulls decided that was far too low to accept, and up we went to close at $82.12. The last time Brent was trading lower than this was on the 8th February and we all know that since then tensions in the Red Sea have escalated which gave Brent the catalyst to tick up to a high of $ 92.18 in mid-April. Now, as I say above, today is a holiday in the UK and USA so expect a thin day of trading today on main markets, but soggy barbecues aside for a moment, what be the reason you giveth for Brent droppeth, Stanleyeth? Asked Shakespeare, apparently. Well, in my very humble opinion I think that tensions and war risk premiums that were priced into markets (mainly centred around Israel/ Gaza conflict and thus Bab Al Mandeb straits issues) are largely not the concern they were, even though such issues still remain, the news value around these issues has diminised, hence traders’ attention has shifted, too. The main focus now seems to be the fact that (and I’m quoting a colleague here (tks Reid) “Continued US economic resiliency, led by ongoing strength across the consumer, will keep inflation sticky in a range between 3 and 5%. The Fed is unlikely to cut rates this year.” Not what all those who priced in rate cuts by Q3 were hoping for. However, summer is round the corner, driving season in the USA officially begins today and all eyes will be on quite what gasoline consumption looks like. So, keep your eyes on those blessed weekly stats from the EIA. Congrats to Southampton on returning to Premier League football. Good day, and week to all.