Oil update: Two drivers and one subplot
|Putting aside last night's oil spill, two key drivers should keep markets supported, Russian production declining and Chinese mobility indicators rising.
On the broader macro landscape, global data, for the most part, augers for some landing other than hard that should keep the dollar on the defensive and favourable for oil prices.
The Fed-generated deflation was the most significant driver of price downside, but with the Fed finally downshifting as inflation eases, that is a subplot positive.
But as the markets wait for factual details of those two primary solid catalysts( China + Russia), price action is likely to lag positive news but react aggressively to recession risk, any post-LNY downside in Chinese restocking demand or upside in Russian production.
Once again, investors could be shifting the burden of proof toward visibility on bullish fundamentals before being willing to deploy risk above current ranges.
We are coming off a year where investor returns were generated through carry via higher backwardation rather than through smooth trending higher spot prices. Passive investors are looking to play again, but it could be an H2 story once Fed terminal rate has passed.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.