Disappointment after Thursday’s OPEC meeting in Vienna left its imprint on the oil market, when oil initially fell by over 5 per cent. Political unrest also continues to play out his right even this week, with the Trump continuation in the focus of the current FBI investigation regarding Russia’s possible influence in the us presidential election. In turn, this has continued to leave an imprint on the u.s. dollar, which was further fuel to the weakening against the euro after German chancellor Angela Merkel stated that the euro is ”too weak”.
Even if Trump continues to create headlines, so was the previous week’s feature OPEC meeting in Vienna on Thursday, despite an extension of the current produktionsfrysningen with a further 9 months until march 2018 was a disappointment as was the oil on the case with over -5 per cent.
It was not, therefore, to OPEC countries and another dozen or so countries outside the oil cartel agreed on an extension of the current limitation of production, this despite the fact that the current compliance actually amounted to the whole of 96 per cent, according to the international energy agency, IEA.
The objective now is to maintain production at a level of 1.8 million barrels lower than the average in 2016.
In the news, we note as previously stated, that a part had expected an extended produktionsfrysning against current levels, at the same time, as analysts commented on the concern over the absence of a clear message on an exit strategy.
Also a part is believed to have sold their holding, bought up over the rise ahead of OPEC meeting, a so-called ”Buy the Rumor, Sell the News”.
Some expect that oil will continue to slowly but surely find momentum enough to achieve 60 dollars in the fourth quarter, while Goldman Sachs as late as in the week downgraded the estimates for the oil in years.
The investment bank lowered its average brent crude to 55.39 dollars, from the previous 56.76 dollars per barrel.
On Monday, was not only the united states, China printing, but also the Uk. China continues to keep closed also on Tuesday, which at the same time meant a lower trading activity among several of the base metals.
Several base metals currently hold a positive undertone, with support from a continued weakening of the u.s. dollar. Aluminum consider we stand out in the crowd, and further down in today’s råvarubrev we take a closer look at this base metal, which looks to reload for a third utbrottsförsök.
For those who appreciate statistics, is actually China for half of the world’s aluminium production.
On the foreign exchange market have both the us president Donald Trump, but even German chancellor Angela Merkel made its imprint since the previous week.
Trumps son-in-law Jared Kushner has also been a focus of the ongoing FBI investigation, regarding Russia’s possible involvement in the u.s. presidential election, which added a further concern.
More and more are starting to question whether it will be possible to implement the expected investments in infrastructure, and tax reform, which in the past has been a big part of the election campaign.
Angela Merkel also said in a speech on Sunday that the EU can no longer count on the united states as a reliable partner, at the same time as the statement during a visit at a barnskola in Berlin that the euro is ”too weak” added to further pressure the dollar.
”Of course, we need to have friendly relations with the united states and the united kingdom, and with our other neighbours, including Russia”, also commented on the chancellor, who at the same time, added: ”we must fight for our future selves”.
Ahead of the forthcoming minimum bid rate on 14 June, we are now up to 82.9% probability of a rise as Fed Rate Monitor. For the moment not pointing to september on an increase, but has almost 25% probability of a rate increase, which also increased since the week before by two percentage points. However, still points to 62.5 per cent probability that the interest rate is maintained after the in the september.
Actually, it is surprising that gold has not shown a greater impression on the basis of this political unrest. Sure, we have now seen a slight upturn, and the establishment of a significant resistance level, but the movement itself is not directly significant.
Among guldbolagen has recently Barrick Gold, one of the world’s largest gold producer went on setbacks in Tanzania. An export ban in the country may mean that the entire 6% of the production is affected.
Among foods, we take this week up orange juice, which, after a sharp decline since the novembertoppen 2016, now looks to possibly find land.
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Analysis
Oil regains ground after sharp fall.
After the heavy fall on disappointment after the OPEC meeting in Vienna despite an extension of the produktionsfrysningen that is, the oil has managed to take back a small part of the lost land.
Since the previous week, oil has backed down -3.51%, still up +8.57% since the end of the year.
Short-term meant Thursday’s decline a visit of 51 dollars, a clear establishment, under the technical nyckelnivån at 53 dollars, which was negative. By contrast, the 200-day moving average strength to maintain the land as we are now back at 52 dollars.
The sales force has after Thursday’s sell-off showed no direct strength, which in itself sends a positive undertone, and we believe that there is a high probability that we can obtain a recovery and the establishment of the 53 dollars again.
Then we turn our eyes to 54, followed by 57 dollars in the long term…
Aluminum is gearing up for a third utbrottsförsök…
Since the beginning of the year, aluminium has continued its journey further north, a rise of nearly 16 per cent.
We have a couple of significant occasions challenged the resistance level at 1970, and then a couple of weeks back, we have a clear positive momentum looks to be on the way up for a third utbrottsförsök.
From a longer perspective, it is not surprising that this price level is hard to beat, then five years, we have experienced difficulties in this level, been challenged.
However, we believe that together with a weaker dollar, support from China on the previously announced investments in infrastructure, together with a third utbrottsförsök can be it is now necessary for an establishment of this technical resistance level for on the rise.
Gold finds ground over the resistance level.
Already last week had the headline read ”Time for gold to shine on?”.
We have now managed to establish ourselves above the resistance level at 1260, which represents a rise of almost 10 per cent since the end of the year. This in itself we see as a positive piece of the puzzle in order to find further momentum to the upswing in the future.
The political unrest, contributing to a weaker dollar. As we all know, gold is often a refuge when there is concern in the market, which in itself is a question mark why we do not have a clearer abreaction on the gold.
Perhaps this is due to the u.s. stock market continues to trade at high levels, perhaps a coming rebound, this may be what is missing to get a proper push in the gold.
We observed increasingly higher bottoms since the low for the year, we also see as something positive. Also the establishment of 1260 dollars, we believe to be of such positive significance, we now turn the attention to the 1300 dollars in the future.
The temporary weakening of the euro…?
The euro has since the end of the year strengthened over +6 per cent against the u.s. dollar, and even if we now have a smaller rebound since the previous week on little more than a half a percent, there is still a positive attitude. This is because we believe that the dollar will continue to weaken in the near future.
We got a clear rising handelsintervall since the end of 2016, and once we got to the north of this kanaltak we had a strong increase, in connection with a Macron won the French presidential election.
In the short term, we believe that we are experiencing a temporary break, before a trip up to 1.14 in the future. The only concern that we see in the present situation, in addition to any political avspeglingar, would be if we step back in previous kanaltak, in such a scenario, we keep an extra eye on the sentimental price level at 1.10.
Time to turn north for orange juice?
It is now a while ago we wrote about the orange juice, which clearly lost ground since the novembertoppen 2016.
Just before the case, we managed to pinpoint the turning point very well, which, however, was slightly stronger than what we could hope for. This means that we then the top has lost as much as 40 percent, of which 30 per cent since the end of the year.
Sellers, however, have clearly started to lose momentum in recent trading days, after the challenging of the heavy level of aid, which asks the question if it may be time to turn to the north again?
To buyers now looked up properly after 9 trading days, minus that challenged the level of support, we see as something very positive.
We are still waiting to see if we get an establishment over 140, which would contribute to additional strength and belief that we actually achieved a turning point. Otherwise the risk is too high that we may get a breakthrough of the support at 135, for a decline to the next support level just above 120.
