Oil increases on expectations of Chinese demand and U.S. SPR replenishment

Asian stock market closes in red on Friday. The Shanghai Composite is down 0.02% at 3167.86 Overall, the Singapore MSCI is down 1.82% at 289.40. Over in Hong Kong, the Hang Seng Index is up 0.42% at 19450.67. In Japan, the Nikkei 225 is down 1.87% at 27527.12. While the Topix index is down 1.20% at 1950.21 South Korea’s Kospi is down 0.04% at 2360.02. Australia S&P/ASX 200 is down 0.78% at 7148.70.

Top News of the Day: –

Oil prices rose on Monday, recovering from steep losses in the prior session as markets bet on a demand recovery fuelled by China’s economic reopening, while the Biden administration’s pledge to begin refilling its strategic reserve also brightened the outlook for prices.

Crude markets were buoyant as several Chinese officials, including President Xi Jinping, vowed to shore up economic growth after a year of COVID-19 lockdowns battered the world’s second-largest economy.

The country has now begun relaxing several anti-COVID measures, with recent road and air transport metrics showing that fuel demand is already picking up.

But China is also grappling with a large spike in COVID-19 infections, which analysts warn could spur market volatility amid conflicting signals over an economic reopening.

An announcement by the U.S. Energy Department on Friday that it will begin repurchasing crude oil for the Strategic Petroleum Reserve also supported the outlook for stronger prices.

This will be the United States’ first purchase since this year’s record 180-million-barrel release from the stockpile.

Market Summary as of 16/12/2022:

European equities Friday closing. The DAX futures contract in Germany traded down 0.67% at 13893.07, and CAC 40 futures were down 1.08% at 6452.63. UK 100 futures contract in the U.K. is down 1.27 at 7332.12

In the U.S. on Wall Street, the Dow Jones Industrial Average closed down 0.85% at 32920.46. The S&P 500 is down 1.11% at 3852.36 and the Nasdaq 100 is down 0.97% at 10705.41, NYSE closes 1.08% down at 15018.17.

Top Market News Today:

In the Forex market, GBPUSD is up 0.36% at 1.2184. The USDJPY is down 0.33% at 136.23, The USDCHF is down 0.16 at 0.9325. EURUSD up 0.22% at 1.0607. EUR/GBP is down 0.07% at 0.8707. The USD/CNY is flat at 0.00% at 6.9708 at the time of writing.

In the Commodity market, U.S. Gold futures are up at 0.08% $1,794.98. Elsewhere, Silver futures are up 0.12% at $23.24 per ounce, and Platinum is up 0.46% at $992.00. per ounce, and Palladium is up 1.29% at $1721.00.

Brent Crude Oil up 1.09% at $79.89 per barrel.

In the Cryptocurrency Markets, Bitcoin was at 16689.10 down 0.31%, Ethereum was down 0.32% at 1179.55, and Litecoin was at 62.69 down 2.70%, at the time of writing.

Top Market Segment to Watch Out for Today:

OIL: – Oil prices reclaimed ground on Monday after tumbling more than $2 a barrel in the previous session as optimism from China’s reopening and oil demand recovery outweighed concerns of a global recession. China, the world’s top crude oil importer and No. 2 oil consumer is experiencing its first of three expected waves of COVID-19 cases after Beijing relaxed mobility restrictions.

Economic News:

US: Federal Reserve policymakers may need to lift U.S. borrowing costs above the peak 5.1% they penciled in just this week, and keep them there perhaps into 2024 to squeeze high inflation out of the economy, three of them signaled on Friday.

The hawkish messages, delivered in separate appearances by New York Fed President John Williams, San Francisco Fed President Mary Daly, and Cleveland Fed President Loretta Mester, underscore the U.S. central bank’s determination to do what it takes to ease price pressures that erode wages and strain household budgets, despite what analysts say could be a million or more jobs lost in the process.

They also stand in stark contrast with expectations expressed in financial markets. Traders on Friday leaned into bets that the Fed policy rate will peak below 5% and the Fed will start cutting rates in the second half of 2023 to cushion what the New York Fed’s own internal model suggests will be an economic downturn.

New York Fed chief Williams said he’s not expecting a recession, but told Bloomberg TV “We’re going to have to do what’s necessary” to get inflation back to the Fed’s 2% target, adding that the peak rate “could be higher than what we’ve written down.”

The Fed this year has raised rates from near zero in March to a range of 4.25%-4.5% in the steepest round of rate hikes since the 1980s, the last time it battled fast-rising prices. Inflation by the Fed’s preferred measure is currently running at 6%, three times its 2% target.

Earlier this week as policymakers delivered the latest rate hike, they also published projections that signaled nearly all of them see the need to lift rates still further, to at least a 5%-5.25% range, in coming months.

Euro Zone: –

European Union unity over sanctions on Russia has started to falter as jitters about the impact on Europe’s own stumbling economy weaken resolve to punish Moscow for war in Ukraine.

EU leaders agreed on Thursday to the ninth package of sanctions but talks were acrimonious, with Poland and the Baltic states that neighbor Russia is campaigning for tougher measures, while states further west, such as Germany, were more hesitant.

Some, such as Belgium and Greece, as well as Hungary which still relies heavily on Russian energy imports, pushed back against further sweeping measures, EU diplomats told Reuters.

“It is becoming increasingly difficult to impose sanctions that hit Russia hard enough, without excessive collateral damage to the EU,” a spokesperson for Belgium’s government said ahead of the deal at the EU leaders’ summit.

After Russia invaded Ukraine in February, starting the biggest conflict in Europe since World War Two, the European Union showed a united front and responded with swift steps against Russia, unusual for the 27-nation bloc where opposing voices often turn debates into marathon meetings.

Sanctions have already been imposed on a range of companies and Russian individuals, while overflights by Russian planes have been banned and business with several Russian banks barred.

But finding common ground now has become more demanding.

After this week’s talks, Lithuanian Foreign Minister Gabrielius Landsbergis described the latest sanctions deal as a “missed opportunity”, saying he was disappointed that EU states spent more time discussing exemptions than tougher steps.

Top Economic Releases Today:

1. EUR: German Ifo Business Climate Index (Dec) Forecast 87.4, Previous 86.3 at 14:30
2. EUR: Wages in Euro Zone (YoY) (Q3) Previous 4.10% at 15:30
3. CAD: RMPI (MoM) (Nov) Previous 1.3% at 19:00
4. GBP: German Business Expectations (Dec) Forecast 82.0, Previous 80.0 at 14:30
5. NZD: Westpac Consumer Sentiment (Q4) Actual 75.6, Previous 87.6 at 01:30

TECHNICAL SUMMARY

GBPUSD TECHNICAL ANALYSIS

TRADE SUGGESTION – BUY AT 1.22183, TAKE PROFIT AT 1.23384, SL AT 1.21159

EURUSD TECHNICAL ANALYSIS

TRADE SUGGESTION – BUY AT 1.06108, TAKE PROFIT AT 1.06610, SL AT 1.05805

AUDUSD TECHNICAL ANALYSIS

TRADE SUGGESTION– SELL AT 0.66801, TAKE PROFIT AT 0.66319, SL AT 0.67288

USDJPY TECHNICAL ANALYSIS

TRADE SUGGESTION- SELL AT 135.776, TAKE PROFIT AT 134.486, SL AT 135.513

DAX 40 INDEX TECHNICAL ANALYSIS

TRADE SUGGESTION – SELL AT 13888.8, TAKE PROFIT AT 13695.5, SL 14032.5

BRENT CRUDE OIL TECHNICAL ANALYSIS

TRADE SUGGESTION– SELL AT 80.00, TAKE PROFIT AT 78.16, SL 80.85

GOLD TECHNICAL ANALYSIS

TRADE SUGGESTION– BUY AT 1793.99, TAKE PROFIT AT 1807.36, SL 1787.30

BITCOIN TECHNICAL ANALYSIS

TRADE SUGGESTION- SELL AT 16638.50, TAKE PROFIT AT 16334.03, SL AT 16928.00