The 3% drop in the price on Brent crude yesterday

Market Movers

There is a limited number of interesting data releases on the calendar today to guide financial markets in the midst of rising turmoil. The market will therefore likely position itself ahead of Federal Reserve chairwoman Janet Yellen’s Humphrey Hawkins testimony tomorrow.
The key event for the oil market will be the release of the International Energy Agency’s Oil Market Report today. Last month’s report showed a drop in China’s oil demand in Q4 15 and a downwards revision in its forecasted demand for 2016. The market will therefore take note of further revisions to the outlook for world oil demand, as weak demand has been the main culprit behind the significant slide in the oil price.
The US Energy Information Administration is also scheduled to publish its updated oil market forecasts in its Short Term Energy Outlook today.

Selected Market News

The VIX index climbed to the highest level since the middle of last month and the gold price topped the highest level since last summer yesterday, as broad-based risk aversion has taken over financial markets on the back of concerns over the state and outlook for the global economy. Consequently, stocks and commodity markets were outperformed by core fixed income markets on a day where the only real news on the economy were new figures indicating declining investor confidence in the euro area. The rout has continued overnight with Nikkei notably plunging more than 5%.

Headlines continue to surface in the oil market of hints that OPEC and non-OPEC oil producers are looking into ways to cooperate to stabilise the oil market and the oil price. Recent attention has been on rumours that Russia and Saudi Arabia could be working on such a strategy. Yesterday, Saudi Arabian oil minister Ali al-Naimi confirmed that Saudi Arabia and Venezuela have held a meeting on the topic. The 3% drop in the price on Brent crude yesterday suggests that the oil market is paying less attention to major oil producers trying to ‘talk up’ oil prices and more to the broad concerns for global economic growth that are currently hampering financial markets.

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