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Crude oil price forecast ahead of OPEC+ meeting

China, Japan, South Korea, the United States, and the United Kingdom agreed to release supplies from their strategic reserves, but and investors will focus…

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This article was originally published by Invezz - Commodities

China, Japan, South Korea, the United States, and the United Kingdom agreed to release supplies from their strategic reserves, but and investors will focus on next week’s meeting of the OPEC+ group.

Supplies from strategic reserves are coming to market

The price of crude oil is advancing this Tuesday even though China, Japan, South Korea, the United States, and the United Kingdom agreed to release supplies from their strategic reserves.

The U.S. Department of Energy will release 50-million barrels of oil from the U.S. strategic reserve in order to fight against high prices.

The higher oil prices are adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery.

Organization of the Petroleum Exporting Countries announced that the oil demand should increase in 2022 to levels seen before the pandemic, and investors will focus on next week’s meeting of the OPEC+ group.

It is still not clear will the OPEC+ group go ahead with 0.4-million barrels per day of scheduled supply increase while United Arab Emirates Energy Minister Suhail Al-Mazrouei told Reuters he sees no logic in adding more supply. Carsten Fritsch, an analyst from Commerzbank added:

OPEC+ might decide to step up its production to a lesser extent in response to the release of strategic oil reserves in the U.S. and other consumer countries. However, it would need to do so in any case, given the oversupply that is looming next year, so the threat is not particularly credible.

Investors will continue to pay attention to the OPEC+ commentaries looking for any clues, but surging COVID-19 cases could hit demand for crude oil again.

Austria imposed a nationwide lockdown from this Monday, and according to Germany’s Health Minister Jens Spahn, Germany is also not ruling out a new lockdown.

Germany is facing “a national emergency,” and Chancellor Angela Merkel said that the latest surge is worse than anything the country has experienced so far.

The battle against the coronavirus is still not over, and the market could easily become oversupplied, which represents a threat to crude oil prices.

The world’s supply chains crisis also represents a serious problem for the global economy; many big companies reported they had lost sales because of supply problems, which could negatively impact the crude oil price.

$75 represents current support

Those interested in investing in commodities like oil should consider that the risk of another decline is probably not over.

Data source: tradingview.com

Crude oil continues to trade below $80 resistance, and if the price falls below $75 support, it would be a firm “sell” signal, and the next target could be around $70.

Coronavirus pandemic continues to pose downside risks together with the release of new supplies, but if the price jumps above $80 resistance, the next target could be around $82.

Summary

China, Japan, South Korea, the United States, and the United Kingdom agreed to release supplies from their strategic reserves, but and investors will focus on next week’s meeting of the OPEC+ group. Surging COVID-19 cases could hit demand for crude oil again, and It is still not clear will the OPEC+ group go ahead with 0.4-million barrels per day of scheduled supply increase.

The post Crude oil price forecast ahead of OPEC+ meeting appeared first on Invezz.



Author: Stanko Iliev

Economics

The Only Road to Riches

Here is the latest issue of The Journal of Investing Wisdom, where I share insightful stuff on investing I am reading and thinking about. Let’s get started….

Here is the latest issue of The Journal of Investing Wisdom, where I share insightful stuff on investing I am reading and thinking about. Let’s get started.

A Thought

You or me are not the market. Earning the long-term returns of the market, of the past or the future, is not in our control. Managing our risks and avoiding ruin, mostly is.

“Rationality is avoidance of systemic ruin,” Nassim Taleb writes.

Peter Bernstein writes in his brilliant book Against the Gods –

Survival is the only road to riches. Let me say that again: Survival is the only road to riches. You should try to maximize return only if losses would not threaten your survival and if you have a compelling future need for the extra gains you might earn.

Trying to avoid the ruin the stock market system enforces upon people who disregard its workings is rational.

Believing that you can beat the system at it, by playing the game mindlessly, isn’t.


A Super Text

Value investing requires a great deal of hard work, unusually strict discipline, and a long-term investment horizon. Few are willing and able to devote sufficient time and effort to become value investors, and only a fraction of those have the proper mindset to succeed.

Like most eighth- grade algebra students, some investors memorize a few formulas or rules and superficially appear competent but do not really understand what they are doing. To achieve long-term success over many financial market and economic cycles, observing a few rules is not enough.

Too many things change too quickly in the investment world for that approach to succeed. It is necessary instead to understand the rationale behind the rules in order to appreciate why they work when they do and don’t when they don’t. Value investing is not a concept that can be learned and applied gradually over time. It is either absorbed and adopted at once, or it is never truly learned.

Value investing is simple to understand but difficult to implement. Value investors are not super-sophisticated analytical wizards who create and apply intricate computer models to find attractive opportunities or assess underlying value.

The hard part is discipline, patience, and judgment. Investors need discipline to avoid the many unattractive pitches that are thrown, patience to wait for the right pitch, and judgment to know when it is time to swing.

~ Seth Klarman, Margin of Safety


An Article

The Winds of Change – Howard Marks

The latest memo from Howard Marks is a must read. He discusses the current investment environment, changing nature of business, inflation and the outlook for the traditional workplace, among other topics. Here’s a passage –

Today, unlike in the 1950s and ’60s, everything seems to change every day. It’s particularly hard to think of a company or industry that won’t either be a disrupter or be disrupted (or both) in the years ahead. Anyone who believes all the firms on today’s list of leading growth companies will still be there in five or ten years has a good chance of being proved wrong.

For investors, this means there’s a new world order. Words like “stable,” “defensive” and “moat” will be less relevant in the future. Much of investing will require more technological expertise than it did in the past. And investments made on the assumptions that tomorrow will look like yesterday must be subject to vastly increased scrutiny.


An Illustration


A Quote

After spending many years in Wall Street and after making and losing millions of dollars, I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

~ Jesse Lauriston Livermore

A Question

Look at your investment portfolio. Is there a part of it that gives you sleepless nights? If yes, what are you doing with it? Why haven’t you cut it off?


That’s about it from me for today.

If you liked this post, please share with others on WhatsApp, Twitter, LinkedIn. Or just email them the link to this post.

If you are seeing this newsletter for the first time, you may subscribe here.

Stay safe.

Regards, Vishal

The post The Only Road to Riches appeared first on Safal Niveshak.

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Economics

Fed’s Exuberance Index Shows Canada’s Real Estate To Be A “Bubble On A Bubble”

The U.S. Federal Reserve’s latest Exuberance Index (Q2), considered a “smoking gun” for bubbles, shows Canada is well into a real estate bubble – a…

The U.S. Federal Reserve’s latest Exuberance Index (Q2), considered a “smoking gun” for bubbles, shows Canada is well into a real estate bubble – a bubble on a bubble.

This article by Lorimer Wilson, Managing Editor of munKNEE.com, is an edited ([ ]) and abridged (…) version of an article by Daniel Wong of betterdwelling.com

The U.S. Federal Reserve Exuberance Index, considered a “smoking gun” for bubbles, seeks to identify…persistent growth in prices in excess of fundamentals to help policymakers act on bubbles early so countries can minimize the damage. Such exuberant price growth is considered irrational and based on emotion and prone to rapid corrections which can become a threat to more than just one buyer.

How do we use this tool? The index makes understanding market exuberance straightforward for analysts. They provide two sets of numbers, a country’s index and a 95% critical value threshold. If the quarter rises above the threshold it’s an exuberant quarter. After five consecutive quarters of exuberance, you have an exuberant market. That’s a bubble and the Canadian real estate just logged its sixth consecutive quarter as an exuberant market, rising to 3.08 and is now more than double the threshold value of 1.37 needed to be considered as such but it might be a lot worse than that just six quarters.

Starting in Q2 2015, housing saw 14 consecutive quarters of exuberance and then 4 out of 5 following quarters marginally below the threshold but that isn’t enough time for a period to be considered non-exuberant. Canadian real estate is either one longer bubble or a bubble on a bubble since it didn’t correct between. In either case, the gap between fundamentals and prices has expanded this whole time.

Conclusion

A  large correction is needed although the Fed can’t tell you when as policy interventions to extend a bubble can delay a correction and any such action is essentially passing on a deficit of market inefficiency, meaning it has to be paid back later – with interest.

A Few Last Words: 
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The post Fed’s Exuberance Index Shows Canada’s Real Estate To Be A “Bubble On A Bubble” appeared first on munKNEE.com.







Author: Lorimer Wilson

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Economics

Inflation Stretching Budgets Thin For Americans As They Rethink Holiday Buying 

Inflation Stretching Budgets Thin For Americans As They Rethink Holiday Buying 

What looked like a win for workers earlier in the year,…

Inflation Stretching Budgets Thin For Americans As They Rethink Holiday Buying 

What looked like a win for workers earlier in the year, as wages increased, has turned out to be another blow after accounting for inflation. Real wages are negative on the year, and that is impacting how consumers spend this holiday season.

Consumer confidence has been sliding as real wages are negative on the year as consumer prices in October spiked 6.2% YoY, far higher than the +5.9% YoY expected and accelerating from September’s 5.4% YoY; that was the highest print since 1990…

Inflation this holiday season will undoubtedly be a topic at the dinner table. Retailers are pushing costs onto consumers as they attempt to preserve margins. Soaring commodity costs (including decade high in food prices), snarled supply chains, higher transportation costs, labor shortages have allowed shallower discounts. 

Buying attitudes for big purchases has utterly collapsed (due to price concerns)

Despite consumer sentiment waterfalling to COVID lows, a new Deloitte survey shows holiday shoppers are now planning to spend more than they anticipated in September.

Deloitte projects holiday sales could increase by 7% to 9% this year.

We do note that Deloitte’s projection is nominal and so may simply reflect higher prices of the same goods, as opposed to a more positive sentiment reflective of confidence driving Americans to ‘buy more’.

Sure enough:

Of the 1,200 respondents (polled between Oct. 21 to Oct. 25), 41% said the reason for expanding their holiday budgets was higher prices. That’s up from 27% who said the same last year. 

So far, consumers are stomaching price increases as BofA forecast a bigger-than-consensus jump in spending in October.

The survey showed about 63% of consumers experienced a stockout situation, meaning that particular gifts they were looking to buy were not in stock due to supply chain woes. 

How will Americans afford this increase in buying? Simple – the way they always have – credit cards. And that spending is already ramping up as inflation eats away at actual incomes and savings. And sure enough, after shrinking for 2 consecutive months, credit card debt soared by just shy of $10 billion – the second highest this year- and pushed the total revolving credit outstanding back over $1 trillion for the first time since April 2020.

So the Federal Reserve finds itself in a situation where it must stomp out soaring inflation by adjusting monetary policy accordingly (but is deathly afraid of the economic and market consequences of such an action). Failure to taper and lift interest rates to combat inflation will cause even more discontent among consumers who may go on a buying strike because they can barely afford shelter, food, and energy. 

Tyler Durden
Fri, 11/26/2021 – 19:30






Author: Tyler Durden

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