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On April 12th, Maybank senior strategist Fiona Lim stated that while the market may be somewhat disappointed by the lack of progress in US-Iran negotiations, this was not entirely unexpected. The US dollar may gain further upward momentum at the opening on Monday. Some Asian currencies, particularly those of net energy importers such as the South Korean won, Philippine peso, Japanese yen, and Thai baht, began to weaken last Friday and may continue to face pressure this week.On April 12th, Saxo Banks Chief Investment Strategist, Charu Chanana, stated that the failure of the US-Iran negotiations was a setback. For the market, this means the previous easing of tensions is likely to fade. Oil prices may rebound, risk sentiment will be dampened again, and the Strait of Hormuz, even without a complete closure, will remain a real choke point risk. However, this is not surprising given the significant differences in the two sides positions on nuclear safeguards and the Strait of Hormuz issue. For the US dollar, this means some renewed safe-haven support, but unless there is a new military escalation, a broad-based surge is unlikely. Gold may benefit from renewed geopolitical hedging demand, but the market is not yet fully back to the worst-case inflation shock scenario.Kremlin: Russia is prepared to sell natural gas to Europe if there is still a surplus in supply to "alternative markets".Kremlin: Russia currently has only 17% to 18% of Donetsk Oblast in Ukraine out of control.Kremlin: Even if Russia doesnt sell natural gas to the EU, the EU will find ways to buy it.

WTI Remains on the Defensive Near $76, as Central Banks Rekindle Recession Fears and PMIs Are Monitored

Daniel Rogers

Dec 16, 2022 11:48

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Following a reversal from the weekly high to welcome the bears, WTI crude oil licks its wounds near $76.20 on Friday morning. Fearing a recession, the traders of black gold are awaiting the first readings of important economic activity figures from leading economies.

 

In spite of this, the energy benchmark fell the most in over a week as global central banks announced rate increases the day before. The oil market's pessimism was exacerbated by the policymakers' willingness to maintain high interest rates for an extended period of time, as well as inflationary concerns. Consequently, economic slowdown worries bolstered the US Dollar's safe-haven demand and weighed on the Oil.

 

Moreover, owing to Beijing's prominence as one of the world's largest consumers of commodities, weak China statistics provided additional support to sellers of black gold. China's Retail Sales dropped to -5.9% in November, compared to -3.6% predicted and -0.5% previously, while Industrial Production came in at 2.2%, compared to 3.3% market predictions and 5.0% earlier readings.

 

In addition, news from Canada weighed on oil prices, as reported by Reuters: "Canada's TC Energy Corporation said it was resuming operations in a stretch of its Keystone pipeline, a week after a spill of more than 14,000 barrels of oil in Kansas caused a shutdown."

 

As a result, oil bears are well-positioned to reclaim control, but await the early readings of the PMIs for the UK, Europe, and the US for the month of December for unambiguous guidance.


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