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January 30th - A depreciating dollar could cause trouble for Trump and the Federal Reserve. A significant depreciation of the dollar could put the US at risk of effectively "importing" inflation. Joe Kalish, chief macro strategist at Ned Davis Research, wrote, "Trumps disregard for the dollar could backfire, undermining his economic plans and causing Republicans to lose their majority in the House." On Wednesday, Powell stated that the Fed would not discuss the dollar, adding that "the Treasury is the one that regulates the currency." Ironically, however, if inflation worsens, it might be the Feds actions that help defend the dollar. Further inflation caused by a continued dollar depreciation could prevent the Fed from lowering interest rates as Trump desires, and could even lead to rate hikes.On January 30th, the Japanese government released data on the 29th showing that, driven by soaring rice prices in the domestic market, Japans private rice imports in 2025 are projected to increase more than 90 times compared to the previous year. Data from the Ministry of Finance shows that private rice imports in Japan last year reached approximately 96,800 tons, the highest since comparable data became available in 2000, roughly 95 times the import volume in 2024. The largest source of rice imports was the United States, accounting for nearly 80%. By month, July saw the highest import volume, exceeding 26,000 tons. Over the past year, Japanese rice prices have surged, repeatedly breaking records. Data from Japanese supermarket rice price monitoring shows that in the week ending January 18th, the average price of a 5kg bag of rice was 4,283 yen (approximately 194 yuan), exceeding the previous weeks average price and remaining above 4,000 yen (181 yuan) for 20 consecutive weeks.January 30th - An explosion occurred at the Tupraş Izmit oil refinery in Kocaeli Province, northwestern Turkey, on the evening of January 29th local time. The explosion took place in a gasoline storage tank area of the refinery, subsequently triggering a large fire. Thick smoke billowed from the scene, flames were visible several kilometers away, and strong tremors were felt, causing panic among local residents. Following the incident, the refinery immediately activated its emergency response plan. For safety reasons, a large number of refinery employees were evacuated. Currently, local fire and safety rescue teams are working to extinguish the fire, and the situation remains under control.January 30th - According to sources in Israel, as US President Trump "is about to make a decision on action against Iran," Israeli security agencies have recently significantly enhanced their defensive and offensive preparedness, closely monitoring regional developments and focusing on how to provide timely warnings to the public in the event of an Iranian attack. On the same day, senior IDF officials and security officials held their weekly situation assessment meeting, with the Iranian issue being a key focus of discussion. Israeli security officials stated that, given President Trumps recent statements and the increased US military presence in the Middle East, the US appears unwilling to allow the status quo regarding Iran to continue. Israel believes Trump may seek larger-scale action, and the Pentagon has developed related plans, with US Central Command continuing to increase troop deployments to the Middle East. An Israeli official stated that the US and Israeli militaries are maintaining coordination.According to Punchbowl, Republican senators plan a potential vote tonight to finalize the appropriations package and the Department of Homeland Securitys temporary funding bill—a sign that an agreement is imminent. While far from certain, this is undoubtedly a positive sign. It requires the cooperation of all 100 senators. An amendment vote will likely be necessary.

Next Year's Increased Oil Demand Will Drive Higher Prices

Haiden Holmes

Jan 11, 2023 10:51

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As the U.S. government anticipated record global petroleum consumption for the coming year, the dollar remained near its lowest level in seven months.


In its Short-Term Energy Outlook, the U.S. Energy Information Administration forecasts that the global consumption of liquid fuels would reach 102,2 million barrels per day in 2024, primarily due to the economic growth of India and China.


Brent futures closed at $80.10 per barrel, an increase of 45 cents or 0.6%, and U.S. crude futures settled at $75.12 per barrel, an increase of 49 cents or 0.6%.


After Federal Reserve Chair Jerome Powell refrained from commenting on monetary policy and the economy during a symposium, the markets awaited clarity regarding the Federal Reserve's plans to increase interest rates. Thursday's U.S. CPI data will provide traders with insight into the near-term possibilities.


According to Tamas Varga of oil broker PVM, Thursday's data "may easily determine the course of the financial and oil markets for the next several weeks."


Varga remarked that the currency would weaken if inflation came in lower than anticipated or the November level.


The dollar remained near its lowest level in seven months. As items denominated in dollars become more affordable for holders of other currencies, a declining dollar could enhance the demand for oil.


Fed Governor Michelle Bowman warned that the U.S. central bank will need to further boost interest rates to combat high inflation, which will likely have a negative impact on the labor market.


After China, the world's largest oil importer and second-largest consumer, reopened its borders over the weekend for the first time in three years, both WTI and Brent climbed 1% on Monday.


China also approved a second batch of crude import limits for 2023, bringing the total for this year up by 20% compared to the previous year.


Dennis Kissler, senior vice president of trading at BOK Financial, commented, "Crude is attempting to establish a bottom now that China has loosened most of its restrictions on international travel and business."


As the global economy exerts downward pressure on oil prices, many analysts predict that a resurgence in Chinese demand will only give limited assistance.


"Because the consumption upswing is still in its infancy, oil prices are likely to remain low and range-bound," according to analysts at Haitong Futures.


Barclays (LON:BARC) bank highlighted a $15-25 per barrel downside to its $98 per barrel Brent projection for 2023 if a "recession in global industrial activity similar to 2009-09 arises."


Goldman Sachs (NYSE:GS) forecasts that the Organization of the Petroleum Exporting Countries' (OPEC) enhanced capacity to increase prices without negatively influencing demand will limit downside risks to its positive oil forecast for 2023.


Separately, oil stockpiles rose by around 14.9 million barrels during the week ending January 6, according to market sources citing data issued Tuesday by the American Petroleum Institute. It was anticipated to decline by 2.24 million. EIA data is due Wednesday. [EIA/S]


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