Over the past three days, volatility in the oil market, has been very high. From a low of September 3 to a high of September 5, oil has risen by more than 9 percent, trying to break the consolidation that has been forming since the beginning of August.
Oil prices may reach the highest weekly increase since mid-July. This is associated with a greater than expected decline in inventories in the United States and the likelihood of a return to trade negotiations between the US and China next month. Oil prices are influenced by stockpiles and production data on the one hand, and trade conflict information on the other. If the conflict escalates, chances for a global economic slowdown or recession are likely to increase, and this may reduce oil demand, which in turn may lead to lower oil prices. If the trade conflict can be eased, the slowdown could be smaller, the fall in demand too, and this could have a positive effect on the price of oil.
This week, we are observing both the demand impulse from the decline in inventories and the hope that the next talks could ease the trade war. According to EIA data released on Thursday, September 5, oil stocks fell by almost 4.8 million barrels last week. The market consensus assumed a decline of 2.48 million. For three weeks, US oil inventories fell to around 423 million barrels in the period to August 30, falling to the lowest level in over 10 months, according to data from the Energy Information Administration.
According to the Chinese Ministry of Commerce, Chinese Vice Premier Liu He agreed to visit the United States in early August. Such a statement was to appear during a Thursday telephone conversation with US representatives. This meeting would have to do with the intention of the Donald Trump administration to raise tariffs from October 1. Investors can now wait impatiently for the October meeting in Washington.
Today in the macroeconomic calendar the most important reading will be the publication of data from the US labor market: NFP, unemployment rate or average hourly earnings. The data package from the USA will appear at 14:30 and may have a significant impact on the US dollar and Fed decision in the second half of September.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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