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In this episode of Oil Insights, host Harry Tchilinguirian, Group Head of Research at Onyx Capital Group, is joined by Onyx Research Associates Vincent Wu and Martha Dowding to discuss how recent geopolitical developments have influenced the oil market. Following the October 1 missile attacks on Israel by Iran, the market is closely monitoring Israel's potential response, with Brent prices fluctuating between $73 and $80 per barrel.

The discussion also covers the latest positioning data, highlighting how money managers are taking cautious positions on Brent. A significant impact was felt when a Washington Post article reported that Israel may target military sites in Iran, not its oil or nuclear infrastructure, suggesting geopolitical uncertainty could keep oil prices volatile.

 In addition, the team explore the macroeconomic headwinds from China’s economic situation and stimulus measures, shedding light on how they may affect oil prices and demand. Harry, Martha and Vincent revisit their previous prediction about Brent's trading range, noting that it remains consistent within the $70s but could shift depending on developments in the Middle East and China.

The team delve into product markets, focusing on Naphtha trends and regional differences in pricing, particularly between Asia and Europe, as they analyse the implications of gasoline demand and petrochemical sector activity.

Chapters for this episode are: 
0:00 Welcome | This week in the oil markets
5:11 Brent Futures
12:47 "Crystal ball moment" - Where will Brent be trading by the end of the year?
20:46 Product of the week: Naphtha
28:00 What we’ll be watching this week | Concluding remarks

Manny and Jonah analyse recent market trends and trading strategies in the oil sector. While the market has been relatively quiet but volatile, with crude oil prices settling in the high 70s per barrel, there is speculation around geopolitical risks - such as potential disruptions in the Strait of Hormuz and the impact of increased crude production in Libya. Manny points out that a sell-off in a specific part of the market curve, mainly due to excess supply and hesitant refiners, has led to a bearish outlook. She cautions about the potential bear traps, stressing that traders need to stay cautious when the market is unpredictable.
 
Financial traders are heavily short, anticipating continued bearish fundamentals. Meanwhile, physical traders face an oversupply situation, leading to aggressive selling. The market dynamics show herd mentality, where traders follow each other, causing rapid price movements without substantial trading activity. Jonah compares this scenario to past market behaviours in credit and crypto markets, emphasising that the current range-bound state has pushed momentum traders into uncertain territory. Despite the bearish sentiment, they suggest that a small event - like a refiner stepping in - could cause a swift price rebound, advising caution.

#oott #geoplitcalrisk #oilandgas #Israel #Iran #MiddleEast #Oilmarkets #bearish #beartrap #straightofHormuz 

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This week, James Brodie and James Todd dive into the latest developments in the global economy, inflation, and U.S. politics. They begin by exploring weak Chinese economic data and discuss how China's worsening deflationary environment and a disappointing stimulus package announcement could impact global markets. 

They break down the latest U.S. inflation figures, with the CPI falling to 2.4% YoY but exceeding expectations. They also analyse insights from the recent FED minutes and comments from Goldman Sachs, discussing the Fed’s outlook on inflation and the rate cut trajectory priced by the OIS and bond markets. 

James Brodie and James Todd address the oil market's high volatility, fuelled by rising Middle East tensions and the Pentagon’s recent announcement of military support for Israel against Iranian threats. 

In the second half of the episode, Onyx Head of Recruitment, Matt Aspin, joins to provide insights into the upcoming U.S. election. Matt delves into the latest polls and betting odds, revealing a tight race, with Harris leading in polls but Trump ahead in betting odds. Matt draws comparisons to the 2016 election and assesses the accuracy of these predictions and what they could mean for the 2024 race. 

For a special episode of Oil Insights, Harry Tchilinguirian, Head of Research at Onyx Capital Group, is joined by Paul Horsnell, Managing Director and Head of Commodity Research at Standard Chartered. Paul is a veteran of oil market analysis, and his views are widely sought-after when it comes to gaining insights into the turbulent world of oil market dynamics. Paul previously occupied similar functions at Barclays, JP Morgan, and the Oxford Institute for Energy Studies.

This episode of Oil Insights focuses on the recent escalation of geopolitical tensions in the Middle East following Iranian strikes on Israel on 1 October and why this time, it is different. Harry and Paul explore how these developments have shifted market attention away from oil fundamentals, notably from oil demand growth views this year and next. The episode further explores what options are available to OPEC+ when plotting their next move regarding supply policy and returning barrels to market. Within non-OPEC+ countries, we discuss US oil supply and growth prospects for US shale as the sector has seen a considerable transformation since the days of ‘drill, baby drill’.

We would be remiss if we did not discuss where oil prices are headed in the current volatile environment, so we also peer into the crystal ball to see where Brent might be headed next.

In today's episode of The Officials, Jorge, Harry, Ed and Will discuss geopolitical tensions in the Middle East, involving Israel, Iran, and other regional players, as well as the broader economic landscape and its effects on oil prices.

Jorge recounts his recent travels to the region, noting observations of missile attacks and the vulnerability of Israeli defences. Jorge emphasises the strategic restraint by Israel, likely influenced by the U.S. due to upcoming elections and broader regional stability concerns.

The Officials also discuss the fait of the Strait of Hormuz, a critical passage for global oil supply, could lead to severe economic disruptions impacting not only Middle Eastern countries but also major consumers like China and India. While geopolitical risks are elevating oil prices, without further escalation, prices may stabilise or even drop.

The team also addresses global economic dynamics, such as China's recent monetary policy interventions aimed at stabilising  markets.  

Group CEO Greg Newman is joined by Mirko Ivanda, Co-Head of Power & Gas from the Onyx Switzerland office, for a special episode of the CEO’s Address. Together, they explore the intricate dynamics of power trading, focusing on how geopolitics fundamentally shapes supply and demand as well as the end-cost of our household energy bills.
 
Mirko provides an in-depth analysis of the evolution of gas trading in Europe, shedding light on why Europe continues to receive gas from Russia through Ukraine, even amidst the ongoing Russia-Ukraine conflict. Greg and Mirko have an open conversation on why gas, unlike oil, faces different sanctions — particularly when originating from Russia — and the implications for Europe's current energy landscape.
 
The discussion emphasizes the critical role of energy consumption in the global economy, with Greg and Mirko delving into how geopolitics and domestic policies are crucial determinants of the final cost reflected in our energy bills.

The week started with weak data, with global manufacturing PMIs contracting for the third straight month in September and with new orders dropping globally at the fastest rate in 11 months. But then services PMIs data surged higher, with the U.S. data at 54.9 (est 51.7) an 8-sigma beat.
 
On Friday, payrolls unexpectedly surged +254K, way above expectations and the unemployment rate fell to 4.1%. Despite being fuelled by 785k government jobs, U.S. yields surged along with the dollar. The 2 year yield had its largest weekly gain in 2 years, and USDJPY its biggest weekly gain in 15 years.
 
European data on the other hand continues to weaken and with Eurozone inflation now at 1.8% (below the ECBs 2% target) expect more aggressive rate cuts in Europe, and a weaker EURUSD. With Middle East tensions rising, and China back from Golden week holidays expect more volatility this week. 

Uncertainty in the middle east has led to a an increase in risk premiums and rises in crude oil prices. As costs of inputs increase the average consumer's struggles will likely increase.
 
Key data releases this week are:
Earnings week
Wednesday- FED minutes, 10-yr bond auction
Thursday - US CPI (est 2.3%), German retail sales
Friday - U.S. PPI, consumer sentiment, UK GDP & IP, Canada payrolls

Jorge is live from Dubai and discussing Iran's attack on Israel with locals. The attack against Israel came as no surprise. Talking to the people in Dubai, they feel Iran was very measured in their actions, going after military assets - not civilians - and the general feeling is that Israel is the wild-card.
 
The question on people's lips right now is: What will happen next? Prior to the attack, the oil market was within touching distance of the upper-60s and, with the news of the attack, rose to the mid-70s. While oil prices had a very strong reaction to the attack, with flat-price Brent rallying all the way up to $76/bbl, after the EIA release, there was a bearish response in price action, but geopolitics are still in the driver's seat, with Brent settling into the mid-70s.
 
Jorge, Will and Edward weigh in on the events in the Middle East, weak economic data and what two of the most important straits to move oil in the world coming under threat of closure, will mean for the oil market.   

This episode was recorded at 4pm BST on 3rd October, 2024.

#macro #macronews #finance #inflation #deflation #stockmarket #stocks #oott #commodities #oilandgas #oil #trading #markets #marketanalysis  #derivatives #derivativestrading #economy #economics #iran #israel #middleeast #middleeastconflict

After the Brent front-month December contract started the day (UK time) testing the $70/bbl handle - seemingly ignoring tension in the Middle East - the market's flipped. The contract is trading above $73/bbl at time of filming after a Tweet led to a headline that an Iran strike on Israel may be imminent. Group Head of Research Harry Tchilinguirian gives his assessment of the situation.

Will we see more headlines like this? Will Brent continue to go up? Time will tell, but one thing's clear: One headline can make all the difference.

The market is falling out of bed this morning! 

Group Head of Research Harry Tchilinguirian analyses the current market, with the Brent front-month December contract testing the $70/bbl handle, the market seemingly disregarding tension in the Middle East, participants going net short based on macro developments in China, and more factors.

What direction will Brent go as the day continues? Stay tuned for updates!