Nov 29, 2017 - Market Update (OPEC day but will Russia, Iraq, Libya, Nigeria join? Preliminary Brexit bill EUR 50 bln, Gold attacking 1300 but..., EU to freeze funding for tax heavens, to prepare new black/grey lists, Softbank looking to buy Uber shares at 30% discount, Bitcoin a threat to global economy?)

Short recap

Asia in green

Europe opening higher

OPEC day today with not only oil but energy stocks in focus

NoKo threating with new missile test again

But no reaction from the markets (a sign that conflict escalation is low for the time being)

Powell with dovish tilt, no change to rate path

HFs having hard time to earn money from bond and FX trading

And may move over to strategies of flattening of US yield curve and USD weakness next year

Brexit – rumours about preliminary exit bill agreement (UK agreed to pay much of EU bill, likely EUR 50 bln)

GBP on a stronger foot today

Senate vote on tax bill already on Thursday

EU to freeze funding for tax heavens, new black and grey list coming

Britain, Malta and Netherlands used for aggressive tax planning

Bitcoin above 10k (up 940% in 2017)

Not threatening the world economy by its seize but creating a psychological bubble

Equities

Goldman Sachs interested in metals trading arm of Scotiabank (USD 1 bln)

Softbank looking to buy Uber shares at 30% discount

Royal Dutch Shell partnering with car producers in installing super-fast chargers in Europe

Oil majors moving aggressively to shale 

Bonds

10-yr Trys yield at 2.33%

10-yr Bund yield at 0.35%

It's Time to Get Out of Emerging Asian Currencies: LGT  link  

Slower growth in China, U.S. tax reform are both set to weigh

Higher interest rates are already largely priced in

EURUSD

Resistance 1.1886 (61.8%)

Support 1.1822 (50.0% Fibo/10 DMA). 1.1810 (38.2% Fibo of 2014/15 decline)

USDJPY

Support 111.02 (50.0% Fibo)

Resistance 111.58 (100 DMA), 111.68 (200 DMA), 111.80 (10 DMA), 111.89 (38.2% Fibo)

Gold

Getting some support from NoKo provocations but needs more JPY strength to move higher

Dowside is limited on geopolitical and economic risks

Not able to break 1300 (Fibo, psychological resistance)

Next resistance 1306, 1313, 1321 (23.6% Fibo)

Support 1288 (10 DM), 1281 (50.0% Fibo), 1283-85 (50/100 DMA)

Weekly Commodity: Oil bulls supported by Canadian supply disruption, Thursday OPEC meeting in focus  link

Data/events

OPEC meeting – to discuss cut extension and duration

Is Russia on the same page? As many independent producers may not necessarily obey the cuts

What about Iraq, Libya, Nigeria as they keep pumping

US inventories up while shale oil production rising

ECB’s Constancio (1000 GMT)

Fed’s Dudley (1330 GMT)

Fed’s Yellen hearing (1500 GMT)

ECB’s Weidmann (1700 GMT)

Fed’s Williams (1745 GMT)

Dec 13 – FOMC

Dec 14 – ECB

Dec 14-15 – EU Summit talking Brexit

Dec 21 – BoJ

Dec 21 – Catalonia elections

Should you have any questions feel free to contact me anytime.

Good luck Champs!

Mr Hawk

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. Contact: landoftradingATgmailDOTcom

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May 25, 2017 - Story of the week: OPEC meeting – few thoughts and what to focus on today

There is a lot in stake for OPEC during today’s meeting in Vienna - Austria, for all participants. Some of the OPEC members have more to lose than others but at the end everybody needs to keep oil prices higher, the main reason is that their government’s budgets are highly relying on oil income. The equation is very simple: same or little higher production – much lower prices – much less income. But there are some other factors due to particular members may want higher oil prices than others.

Crude exports

At the end of last year OPEC countries and Russia agreed to cut their oil production by 1.8 mil bpd. However the effect of the production cut started to fade after few months as US Shale oil producers managed to lock in prices higher than their costs and since then they are opening one oil field after another bringing the US oil production again back close to 10mil bpd. The other reason the effect of the cut was limited was, that while the OPEC countries more or less complied with the production cut agreement there was no decision that they will also decrease exporting. Hence these countries continued to sell the approximately same amount of oil by emptying their stocks which obviously meant there was no real change in supply. However with OPEC oil stocks lower and summer demand picking up, the extension may have a more balancing effect this time. Therefore the many will search in the agreement today for the word “export”…

US shale oil

The rising US oil production is definitely against bringing the balance back to the market. While before the slump in oil prices the break even for many of the shale oil companies was around $80 per barrel, the companies managed to increase efficiency and the costs were brought down below $55 on average almost in any shale oil basin. The steadily growing number of active oil rigs is confirming the fact that shale oil producers managed to hedge their future production well above their costs and this will mean that for OPEC the balance on the oil market will be harder to achieve.

The US shale oil industry is far from what it’s in the OPEC countries or Russia where the state owned oil companies dominate. In the US the industry is based on free competition with a lot of independent companies. A lot of them bankrupted in the last 2 years but the production capacities was bought by the rest of the industry so there was a much smaller decline than initially anticipated by OPEC.

Aramco IPO

Saudi Arabia’s planning to sell around 5% of shares of the countries giant oil and gas producers Aramco. This is one of the main reasons Saudi Arabia is pushing for higher oil prices as the valuation of the company mainly depends on the dollar value of the Saudi oil reserves. As the country is changing the taxation regime of Aramco while the production decision will stay purely in government hands to make it look better, this also shows how needed a good valuation of the company.

These are just few factors affecting the decision today but definitely the market is expecting a move from OPEC. The positive thing is that lately Iraq also agreed to join the extension of the cut after the Saudi oil minister visited his counterparty. However the big question everybody is asking now is if the extension will be enough to keep the traders bullish. Many are speculating that OPEC may also increase the amount of the production cut. This was for now not mentioned by the participants. The second question after regarding the deal will be the member’s compliance with the agreement in the coming months that was the key question in 1H of 2017.

Summary what to watch

1.      If extending the production cut by how much (6-9 months expected)

2.      If anything about exports in the wording of the agreement

3.      If any increase of production

4.      If Russia will join the extension (crucial)

OPEC/Non-OPEC meeting

0800 GMT - OPEC meeting 

1300 GMT - OPEC/Non-OPEC meeting 

1500 GMT - Joint press conference 

Full schedule  link 

Good Luck and remember to watch your risk and be consistent

Mr Tech Man

DISCLAIMER: This material was created for informational purposes only and represents the Land of Trading team’s view of the past and current economic and capital market environment. It is not an investment advice and should not be viewed that way at all, and the creators of this material cannot be held liable for any potential losses resulting from trading, where despite this disclaimer someone would consider this material as an investment advice. All rights reserved ©2016. 

Contact: landoftradingATgmailDOTcom, Blog: landoftrading.blogspot.com

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