Like most assets, right now oil is beholden to the economy, analysts at Sevens Report Research wrote in Friday’s newsletter. Click here to read the full article.
Oil stabilized at support near the 2023 lows following Wednesday’s weekly Energy Information Administration report, which showed a “massive draw” in commercial crude-oil stockpiles, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Futures are moderately higher mostly on momentum and end of quarter/half positioning, as economic data overnight was mixed but not bad enough to interrupt the rally, said Tom Essaye, founder at Sevens Report Research. Click here to read the full article.
The 23 largest banks in the U.S. passed the Fed’s annual stress tests, and while none were expected to fail, the fact that there were no negative surprises is a general positive for the banking sector and financials, Tom Essaye, founder of research firm Sevens Reports, wrote Thursday. Click here to read the full article.
What’s in Today’s Report:
Futures are flat to start the second half of 2023 following a quiet weekend of news.
Economic data was mixed overnight as the EU Manufacturing PMI slightly missed estimates (43.4 vs. (E) 43.6) while the UK reading slightly beat expectations (46.5 vs. (E) 46.2), but neither number is moving markets.
Saudi Arabia and Russia made separate announcements about further reducing oil supply in the coming months, although they aren’t causing a material rally.
Today focus will be on the ISM Manufacturing PMI (E: 47.2) and at this point, and with yields this high, markets need to see solid data and that means the ISM Manufacturing PMI moving closer towards 50 and beating expectations.
As a reminder, the stock market will close at 1:00 p.m. today ahead of the July 4th holiday.
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This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.
WTI futures have dropped below $70/bbl four times this year with increasing frequency, but each time technical support has held at $67-$69, Sevens Report Research said, also noting each subsequent price bounce has run out of steam at a lower price point. Click here to read the full article.
This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest the political volatility in Russia and underwhelming economic data.
A short-lived rebellion by the Wagner private army against the Russian government dominated headlines this weekend, but from a market standpoint this only matters via its impact on oil prices, and they are little changed.
Economically, German IFO Business Expectations fell to 83.6 vs. (E) 88.0, which is the second weak German economic number in the past two trading days.
Today focus will remain on the Russian political situation, so watch oil to cut through the headline noise. If oil rises sharply, the situation is deteriorating and that would weigh on markets.
What’s in Today’s Report:
Stock futures are tracking global equity markets lower this morning while longer duration bonds are rallying after soft PMI data in Europe bolstered recession fears overnight.
Economically, the Eurozone Composite PMI Flash fell to 50.3 vs. (E) 52.5 indicating the EU economy is on the brink contracting.
The Manufacturing PMI was better than feared but the Services PMI dropped to 52.4 vs. (E) 54.7 pointing to a sudden slowdown in the service sector which accounts for the bulk of developed economic growth around the globe.
Looking into today’s session, focus will be on the U.S. PMI Flash data due out shortly after the bell with the Manufacturing PMI Flash expected to come in at 48.5 while the Services PMI Flash is expected at 53.5. If the data meaningfully disappoints, especially in the service sector, expect more risk off money flows amid growing recession worries today.
Finally, there are two Fed officials speaking today: Bostic (7:30 a.m. ET) and Mester (1:40 p.m. ET) but it is unlikely that either materially deviates from the Fed’s narrative from the last week which is continued commitment to reigning in inflation with further policy tightening in H2’23.