Archives of “November 4, 2021” day

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Oil gives back most of its gains after OPEC

  
Analysis, Crude

Oil falls $3 from the highs

Oil falls $3 from the highs
From high to low in the past hour or so, oil is down $2.98, from $83.40 to $80.42.
The statement and OPEC comments didn’t include any clear reason for the selling. It may simply be a ‘sell the fact’ trade after a decision that was expected.
More broadly, the stronger US dollar is a headwind for oil and other commodities. However I’d argue that the dollar is strong because of a lower-rate path that’s being priced in. That’s good for both growth and the reflation trade, which should boomerang back into oil.
All that said, oil ran for nine-weeks straight starting in September and the bulls have been taking some off the table. In addition, Mexico is putting on its annual hedge at the moment, according to reports. That put selling could be reverberating through the cruve market.

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OPEC agrees to raise output 400k bpd, as expected – report

  
  Analysis

No surprise

The press conference is coming up shortly. This report is from Energy Intel, who cites sources.
The only drama in the press conference is whether OPEC highlights a willingness to be more flexible going forward.
Update: Another report now says the same.
The next OPEC meeting will take place on Dec 2.
Update 2: A report says OPEC doesn’t plan to compensate for countries that have under-produced quotas.

EURUSD tumbles to new low for the week…bounces modestly

  
  Analysis

Gains from Monday’s lows are fully reversed

The EURUSD traded to a low of 1.15455 on Monday and raced higher. The high price on Monday stalled near its 100 hour moving average (blue line), failed on a break of that same moving average on Tuesday, but rallied higher yesterday on dollar selling through the FOMC decision. In the process, the price extended back above the 100 and 200 hour moving averages (blue and green lines) and briefly above its 50% midpoint of the move down from last week’s high to last week’s low at 1.1613. The pair also tested the low of a swing area (see red numbered circles) near 1.1616, but for the the most part found sellers against the midpoint area.
Gains from Monday's lows are fully reversed
Today, the price reversed back below the aforementioned moving average levels (both the 100- and 200 hour MAs are still moving to the downside) and buyers from yesterdays started to turn to sellers today..
The pair moved below a swing area between 1.1564 and 1.1571 (that is now a close risk area for sellers today) and down to a another swing area between 1.1540 and 1.15455.  The swing lows going back to October 6 bottom at 1.15455, 1.1540, 1.15282 and 1.15237.  Each will be targets on more selling. A break below the lowest swing low would take the pair to the lowest level since the July 2020.
Close risk now for shorts would be the swing area between 1.1564 and 1.1571. Stay below keeps the intraday sellers in control.

Reminder: OPEC+ to meet later today

  
Analysis, Crude

But no change to output policy is expected

OPEC
Despite calls by the US to loosen the taps, OPEC+ is almost certainly not going to budge with their plan to raise output by 400k bpd. The bloc has maintained a consistent message in outlining that pandemic risks are not over yet and they are also arguably not going to overreact to the global energy crisis – at least for the time being.
Oil is down 0.5% to on the day currently to $80.49 after the drop yesterday, with support seen around the $80 mark for now. This comes after a period of back and forth consolidation after testing the recent highs close to $85.

Dollar pares post-FOMC decline for the most part

  
  Uncategorized

Dollar holds slight gains ahead of European trading

The greenback is sitting slightly higher as we look towards the session ahead, with EUR/USD dribbling lower in the past few hours in a fall from 1.1600 to 1.1583 currently.
EUR/USD H1 04-11
Buyers did try for a push above the key hourly moving averages during the initial reaction to the Fed but has since given back control to sellers. That said, any major downside is still hard to come by as price action continues to consolidate after Friday’s drop.
It will take a push below the October lows of 1.1525-29 to really solidify any further downside momentum in the pair at this point.
Elsewhere, GBP/USD is also down 0.2% to 1.3655 and erasing its post-FOMC jump. Meanwhile, USD/CAD is up slightly to 1.2405 and just shy of pre-FOMC levels around 1.2415-20, and AUD/USD is down 0.2% to 0.7430 nearing its pre-FOMC levels at 0.7420-25.

Moody’s says headwinds to growth will dissipate in 2022, stable global growth by 2023

  
Analysis, Economy

Ratings agency Moody’s with that upbeat headline, but there are potential hurdles, read on …

 

  • says headwinds to growth will dissipate next year, allowing global economy to enter stable growth by 2023
  • Covid-19 outbreaks, continued supply chain logjams and labour shortages to diminish in 2022
  • expects G20 economies to grow 4.4% collectively in 2022 and then by 3.2% in 2023
  • monetary and credit conditions will tighten as central banks look to remove pandemic-era liquidity and interest rate support
  • another risk to global recovery is potential for more persistent supply chain disruptions, ratcheting up of inflation

Oil – Talks with Iran on nuclear deal will recommence on November 29

  
Analysis, Crude

A date has been set for negotiations, Iran is aiming for removal of US-imposed sanctions, while the other participants are seeking a deal on Iran’s nuclear program.

Multilateral talks will begin again on November 29 in Vienna.
(ps. This is not breaking news, posting as an ICYMI)
If an agreement can be cemented it paves the way for Iran to return, officially, to world oil markets.
Coming up later today is the OPEC+ meeting, no change in policy from the group is expected, the output increase is expected to be held at +400K bbls/day.
A date has been set for negotiations, Iran is aiming for removal of US-imposed sanctions, while the other participants are seeking a deal on Iran's nuclear program. 

PBOC sets USD/ CNY central rate at 6.3943 (vs. estimate at 6.3911)

  
  Analysis

The People’s Bank of China set the onshore yuan (CNY) reference rate for the trading session ahead.

  • USD/CNY is permitted to trade plus or minus 2% from this daily reference rate.
  • CNH is the offshore yuan. USD/CNH has no restrictions on its trading range.
  • Reuters estimate for the reference rate was 6.3911. A significantly stronger or weaker rate than expected is typically considered a signal from the PBOC.
  • The previous close was 6.4062
  • Yesterday’s reference rate was 6.4079

 

PBOC injects 50bn yuan via 7-day reverse repos

  • 200bn RRs mature today
  • thus net 150bn drain in open market operations for the day
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