First of all, short overview on consumer prices in the US. The figures on producer prices, wholesale inventories released this week, clearly indicated a slowdown in consumer demand in the US, as we discussed in yesterday's note. July showed that our fears were justified. The monthly change was 0.1%, with a forecast of 0.2%, which, with the clouds clogging around the December increase, completely drove the market sentiment into general disheartening. The correction for the dollar is over, the time is giving way to euro . Gold rise is on its target to $1,300.
The oil market yesterday clearly demonstrated that it intends to develop an upward trend, but powerful resistance has brought the bulls to their senses and they have saved the further efforts for the next week. It is obvious that the fundamental background for black gold has been consistently improving, beginning with the concessions of Saudi Arabia and the dynamics of commercial oil reserves in the US, to forecasts of agencies for global consumption, which the IEA report today. The organization foresees an increase in demand to 1.5M barrels, 100 thousand barrels higher than in the previous forecast. However, next year, according to the calculations of the agency, the growth in demand will be 1.4M barrels, in total 97.6M bpd. It's hard to say how much the markets listen to the agency's words, which periodically picks up the calculations taking into account the incoming data, but their psychological effect on the market should not be discarded. The low compliance with the OPEC + obligations (75%), the unpredictable behavior of shale companies in the US and the freedom of Libya and Nigeria in the choice of production volumes remain constraining factors.
Regarding the concessions of Saudi Arabia. The policy of the kingdom was not very impressive for the markets, since the restriction of oil exports is likely to have a short-term effect on prices (and psychologically on speculators), but the country will continue to accumulate reserves and will later try to catch up by returning its barrels in the form of excess. It is clear that the prospects are not particularly bright, unless, of course, world consumers start up economic growth with a sharp increase in energy demand. It remains to be seen the "degree of aggression" of American oil producers which, with the efforts of the government, intend to build a world oil power from the United States.
A barrel of WTI with the September delivery today cost about $ 48.40, attacking yesterday the level of $ 50 again, but so far unsuccessfully. Large speculators continue to increase rates on growth, and the last jump from 423.3K to 486.6K in a net position on black gold can not but inspire optimism.
Arthur Idiatulin, Tickmill Market Watcher
This analysis is provided as general market commentary and does not constitute investment advice.