Thursday, June 8, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use
Oil Market News
  • Home
  • Marketdaily
  • Price
  • crudenow
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEChot
  • brend
  • ships
Oil Market News
Home brend

Column: Wall St sees China slump as pump relief, to a point: McGeever

10 months ago
in brend
Column: Wall St sees China slump as pump relief, to a point: McGeever
Share on FacebookShare on Twitter


Gas prices are displayed on the sign of BP gas station in the SoHo area of Manhattan in New York February 3, 2016. The price of regular unleaded is $2.39 per gallon. Oil prices have fallen about 70 percent in the past 18 months, hit by a growing glut and cooling economic growth in China and other emerging markets. REUTERS/Brendan McDermid

Register now for FREE unlimited access to Reuters.com

ORLANDO, Fla., Aug 17 (Reuters) – A dismal batch of indicators this week significantly darkened the economic clouds over China, but there is a clear silver lining for Wall Street and world markets: falling oil prices.

As the slowdown in the world’s largest crude importer pushes oil lower, inflation pressures have eased, giving the U.S. Federal Reserve more leeway to ease up on its aggressive interest rate-hiking campaign and engineer the economic ‘soft landing’ it desperately desires.

Latest Oil News

Saudi Arabia’s economy expands 8.7% in 2022 on oil sector boost

Saudi Arabia’s economy expands 8.7% in 2022 on oil sector boost

February 1, 2023
US oil sector sees chance to overhaul permitting – Argus Media

Activists board Shell FPSO on route to N Sea: Update – Argus Media

January 31, 2023
Naphtha crack rises as Brent falls

Naphtha crack rises as Brent falls

January 30, 2023
Fuel prices to increase by 7%-13% from February 1, 2023 – IES

Fuel prices to increase by 7%-13% from February 1, 2023 – IES

January 29, 2023

Of course, there is a potential growth shock for the rest of the world that could intensify recession fears in the United States and elsewhere. Risk assets would struggle in a recession.

Register now for FREE unlimited access to Reuters.com

But investors’ glass is half full, and has been for around two months since the Fed’s June policy meeting and what increasingly appears to be the recent high in oil and ‘peak inflation’.

Brent crude fell 3% on Monday after Beijing’s data dump to its lowest since before Russia’s invasion of Ukraine in February, and Wall Street closed comfortably in the green. Oil fell a further 3% on Tuesday and the S&P 500 and Dow both rose to fresh four-month highs.

The inverse correlation between oil and Wall Street is the tightest it has been since March. When oil falls, the S&P 500 rises.

Cheaper oil has put markets in a sweet spot, and as Brian Jacobsen, senior investment strategist at Allspring Global Investments notes, the equity rally has been accompanied by an equally steady recovery in credit markets.

But he cautions that it could soon sour.

“At what point does it reflect demand destruction setting in? Demand destruction is not a good ingredient for a continued equity market rally,” Jacobsen warns.

Jacobsen reckons $85 a barrel is an important area. A break below could represent a less benign relationship between oil, inflation, demand and economic activity.

Brent’s decline of around 25% since June 14 has been accompanied lock step with a growing belief that the United States has reached ‘peak inflation’. A range of consumer and producer price indicators, and consumer inflation expectation surveys, all point in this direction. read more

POSITIVE SUPPLY SHOCK

Since its trough on June 17, the S&P 500 has rebounded nearly 20%, the VIX volatility index is under 20 for the first time since April, and high yield U.S. credit spreads have tightened around 175 basis points.

Alan Ruskin at Deutsche Bank notes that in ‘normal times’ a steep decline in China’s economic performance would have a deeply negative impact on global activity. It accounts for over 40% of global demand in iron ore, coal, copper, aluminum, steel, nickel, and pork.

But the slowdown could also turn into a positive supply shock – weaker demand from China leading to lower commodity prices and reduced bottlenecks. Softer commodity prices are already easing inflation pressures and inflation expectations.

“Initially at least, the aggregate impact on global risk will be a positive, as global assets take their lead from the knock-on impact to U.S. markets in particular. This favorable risk influence is stronger now, precisely because it fits with the … ‘peak inflation’ thematic,” Ruskin wrote this week.

This relatively benign ‘Goldilocks’ scenario – falling oil prices, easing inflationary pressures, rising risk assets – could get another fillip if a U.S.-Iran nuclear deal is struck, which would allow more Iranian oil exports.

But these arguments and scenarios are circular. Even lower oil, higher stocks, and narrower credit spreads would ease overall financial conditions without fail. This is exactly what the Fed is trying to avoid, and Jerome Powell and co might be tempted to push rates even further into restrictive territory.

That’s when ‘demand destruction’ fears would likely start to dominate investors’ thinking. We might get there, but we are certainly not yet.

Related columns:

– Breakdown in ‘breakevens’ holes inflation buffer (Aug. 10) read more

– ‘Peak inflation’ ambiguous for dollar (Aug. 17) read more

(The opinions expressed here are those of the author, a columnist for Reuters)

Register now for FREE unlimited access to Reuters.com

By Jamie McGeever; editing by Diane Craft

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London, and now back in the U.S. again. Focus on economics, central banks, policymakers, and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie



www.reuters.com

Tags: AMERSANLINSAsiaASXPACBASMTLChinaCLMCNColumnCOMCPPREASIAEcoECONEMRGENEREnergyENFFENGENREREPLENMCEMCGEEVER/METLMOGNAMERNRGOILGPLCYPointPRODpumpreliefRepREPI:TRANSPORT-FUELSseesslumpSTXUSWall
Previous Post

Colombian proposed tax reform 2022: main impacts on the extractive industry | Dentons

Next Post

Saudi Arabia’s crude oil exports, output rise in June

Related Posts

Saudi Arabia’s economy expands 8.7% in 2022 on oil sector boost

Saudi Arabia’s economy expands 8.7% in 2022 on oil sector boost

by Oil Market News
February 1, 2023
0

Saudi Arabia’s economy grew by 8.7 per cent in 2022, boosted by a sharp increase in the kingdom’s oil and...

US oil sector sees chance to overhaul permitting – Argus Media

Activists board Shell FPSO on route to N Sea: Update – Argus Media

by Oil Market News
January 31, 2023
0

Activists board Shell FPSO on route to N Sea: Update Argus Media news.google.com

Naphtha crack rises as Brent falls

Naphtha crack rises as Brent falls

by Oil Market News
January 30, 2023
0

Asia’s naphtha refining profit margin rose on Monday after two straight sessions of losses amid weakness in crude oil prices....

Fuel prices to increase by 7%-13% from February 1, 2023 – IES

Fuel prices to increase by 7%-13% from February 1, 2023 – IES

by Oil Market News
January 29, 2023
0

The Institute for Energy Security (IES) is predicting between 7% and 13% jump in the prices of petrol, diesel and...

ExxonMobil Likely to Report Surge in Q4 Earnings

ExxonMobil Likely to Report Surge in Q4 Earnings

by Oil Market News
January 28, 2023
0

ExxonMobil's Key Stats    Q4 2022 (est)  Q4 2021  Q4 2020  Adjusted EPS  $3.27  $2.06  $0.03  Revenue  $111B  $85B  $46.5B...

Trinity To Spud Jacobin Well In Second Quarter Of 2023

Trinity To Spud Jacobin Well In Second Quarter Of 2023

by Oil Market News
January 27, 2023
0

Trinidad and Tobago-focused Trinity Exploration & Production has secured all the permits and approvals to drill the deep Jacobin prospect...

Next Post
Saudi Arabia’s crude oil exports, output rise in June

Saudi Arabia's crude oil exports, output rise in June

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments

Trend Oil News

EnQuest Plc output at top end of previously downgraded guidance

EnQuest Plc output at top end of previously downgraded guidance

1 year ago
TechnipFMC awarded significant subsea contract for Shell’s North Sea development

TechnipFMC awarded significant subsea contract for Shell’s North Sea development

9 months ago
Nicolas Maduro Tempts West With an Abundance of Oil and Gas, Venezuelan President

Nicolas Maduro Tempts West With an Abundance of Oil and Gas, Venezuelan President

9 months ago
Things Are Pretty Shocking On The Oil Market Front

Things Are Pretty Shocking On The Oil Market Front

8 months ago
Eni chief predicts gas market will remain tight for at least four years

Eni chief predicts gas market will remain tight for at least four years

1 year ago
ADVERTISEMENT
Canadian refiner Irving Oil explores options including sale

Canadian refiner Irving Oil explores options including sale

June 8, 2023

UK watchdog bans Shell, Repsol and Petronas greenwashing ads

June 7, 2023

Opec+ is not on board with Saudi’s ‘whatever it takes’ message

June 6, 2023

Saudi Arabia seeks to boost oil price with output cut of 1mn barrels a day

June 5, 2023

Opec bans prominent media groups from Vienna meeting

June 4, 2023

Saudi Arabia’s ‘prickly prince’ of oil bristles as crude price slides

June 3, 2023

Crude Oil

4 Days from Deadline, EU Fails To Agree On Russian Oil Products Price Cap

4 Days from Deadline, EU Fails To Agree On Russian Oil Products Price Cap

February 1, 2023
Oil rises after U.S. fuel stocks draw down; economic concerns loom

Oil prices settle steady on higher U.S. demand, weaker dollar

January 31, 2023
S&P 500 Down 1%; Crude Oil Drops Over 2%

S&P 500 Down 1%; Crude Oil Drops Over 2%

January 30, 2023
Russia Can’t Replace the Energy Market Putin Broke

Russia Can’t Replace the Energy Market Putin Broke

January 29, 2023

Investing

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

Orbital Sidekick Raises $10M Investment to Monitor Oil and Gas Industry from Space 

February 1, 2023
Crude Oil Shielded From Bond and Stock Market Rout

Clean-energy investing poised to top money backing oil and gas after hitting a record

January 31, 2023
Crude Oil Shielded From Bond and Stock Market Rout

The Cushing® MLP & Infrastructure Total Return Fund Announces Fund Name Change

January 30, 2023
Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

Boeing’s 747, the original jumbo jet, prepares for final send-off By Reuters

January 29, 2023

Market

Canadian refiner Irving Oil explores options including sale

Canadian refiner Irving Oil explores options including sale

June 8, 2023
UK watchdog bans Shell, Repsol and Petronas greenwashing ads

UK watchdog bans Shell, Repsol and Petronas greenwashing ads

June 7, 2023
Opec+ is not on board with Saudi’s ‘whatever it takes’ message

Opec+ is not on board with Saudi’s ‘whatever it takes’ message

June 6, 2023
Saudi Arabia seeks to boost oil price with output cut of 1mn barrels a day

Saudi Arabia seeks to boost oil price with output cut of 1mn barrels a day

June 5, 2023

OPEC

US Close- Fed signals more hikes coming, Powell says disinflation process begun, ADP

US Close- Fed signals more hikes coming, Powell says disinflation process begun, ADP

February 1, 2023
‘OPEC does not control the price’: OPEC President | OPEC News

‘OPEC does not control the price’: OPEC President | OPEC News

January 31, 2023
OPEC+ Closely Watches Chinese Factory Data

OPEC+ Closely Watches Chinese Factory Data

January 30, 2023
Week Ahead: FOMC, BOE, ECB, OPEC, NFP and Big Tech Earnings

Week Ahead: FOMC, BOE, ECB, OPEC, NFP and Big Tech Earnings

January 29, 2023
  • Submit news
  • Contact
  • DMCA
  • Cookie Privacy
  • Privacy Policy
  • Terms of Use

© 2022 OilMarket.News

No Result
View All Result
  • Home
  • Market
  • Price
  • crude
  • Companies
  • politics
  • Gas
  • investing
  • Stock
  • OPEC
  • brend
  • ships

© 2022 OilMarket.News

wpDiscuz
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.