Financial & Market News
Crude oil: From the WEF in Davos, the CEO of the United Arab Emirates-based Crescent Petroleum, an oil and natural gas producer, sees this year’s prices remaining volatile: "It will be in this $60 to $80 range," (presume Brent) but subject to huge fluctuations, price prediction likely “as hard as it has ever been, the most volatile in 30 years, partly because of certain tweets (dig) but also because there isn't much spare capacity, $90 more likely than $40.” It was certainly another undecided day on the ping-pong table as WTI ranged from $52.07 to $53.42/bbl, Brent at $8.05 more, but ending the day nearer its best, and that after yesterday’s API statistical release that showed U.S. crude stocks rising by 6.6 million barrels last week, where a fall of 42,000 barrels had been forecast or expected. The day featured the now-usual battle between economic slowdown on the one hand and sanctions, OPEC+ cuts and now the U.S. threat of sanctions on OPEC member Venezuela on the other. Investors see supply as fairly tightly balanced against demand, but are undermined by lack of growth concerns. The government EIA’s US stock figures release early evening underlined the earlier API’s issue, noting an even larger 8m barrel crude inventories increase on the week, with gasoline stocks increasing by 4.1 million barrels, distillate inventories, including diesel and home heating fuel, falling by about 600,000 barrels. But it seems that the evening’s stronger influence on crude is Two-Presidents Venezuela, the incumbent Maduro breaking off diplomatic relations and giving U.S. diplomatic personnel 72 hours to leave the country, the U.S. State Department (along with many others), preferring to recognize opposition leader Juan Guaido as the country's interim president, saying it wouldn’t comply with that order. What fun! Hello sanctions! Or helicopters.
Gold: ended its day at just above the middle of a $1275.30 to $1283.90/oz range, struggling with a stronger dollar and with the psychological hurdle, something of a tug-of-war, explained by one metals analyst: "I think the market doesn't believe, at least yet, that there's a case for gold to go above $1,300 ... The dollar is still relatively strong," so “Gold still faces short-term headwinds,” as it’s “only one of the beneficiaries of renewed interest for safe havens from market volatility,” while others see that, "The macro-economic backdrop is more positive for gold, which we think will continue to benefit from safe-haven demand this year," forecasting gold prices “at $1,350 by end-2019,” adding that "Investor inflows look set to continue given our expectation of further falls in global equity markets and slower economic growth." Our regular technical analyst: “Spot gold could retest support at $1,278 an ounce, a break below which could cause a loss to the next support at $1,266.” Clear? Good.
Equities: All but two of Asia’s exchanges closed higher Thursday despite the uncertainties but while the Korean market was best at 0.81 percent up, the mainland Chinese markets recovered from earlier losses to finish in the 0.40’s positive., but sentiment remains hesitant over the on-off trade negotiations. European bourses did close up in a 2:1 ratio but none beat the one percent mark in either direction, the three main ones 0.35 percent down to 0.65 percent up, politics, banking and ECB under scrutiny, Mr. Draghi’s actions and warnings hardly helping, the Dow’s jittery performance adding to uncertainties as a positive start on Wall Street soon evaporated, the Dow itself down 150 points, the Nasdaq up a fraction, the S&P 500 at 0.40 percent off.
General economic/political ribbon: The White House’s economic adviser Kevin Hassett said that the U.S. economy “could register zero growth in the first three months if the partial government shutdown lasts the whole quarter.” So far, it’s into its 34th straight day. Morgan Stanley’s CEO said it will be "extremely negative" for the U.S. “if the shutdown continues for much longer” and "If it goes on through months of this year, it's going to have an extremely damaging effect" on the U.S. economy. But for today, weekly jobless claims fell to 199,000 last week, their lowest in 49 years.