Quarterly Outlook
Q4 Outlook for Investors: Diversify like it’s 2025 – don’t fall for déjà vu
Jacob Falkencrone
Global Head of Investment Strategy
You can access both of our platforms from a single Saxo account.
Crude oil stuck with supply and demand both challenged
Ole Hansen
Head of Commodity Strategy
Summary: The Venezuelan political crisis as well as a Saudi pledge to lower output further should have boosted crude oil, but pulling in the opposite direction are heightened concerns about global growth, particularly that of China.
During the past few days crude oil has been presented with plenty of reasons to resume the rally that stalled in recent weeks. Crude oil production in Venezuela, and especially exports to the US, are expected to drop in response to the growing political crisis and the US implementing new sanctions against its state-run oil company, PDVSA. Additional updates on the sanctions and its potential impact can be found here from Reuters and S&P Global Platts.
Adding to the support has been a pledge from Saudi’s oil minister Falih to make even deeper cuts in February below the voluntary 10.3 million barrels/day production cap recently agreed with the Opec+ group of producers.
Adding to the support has been a pledge from Saudi’s oil minister Falih to make even deeper cuts in February below the voluntary 10.3 million barrels/day production cap recently agreed with the Opec+ group of producers.
Instead of focusing on emerging supply risks, crude oil instead dropped the most in a month yesterday as macroeconomic concerns continued to raise concerns about a not yet realised slowdown in demand. Once again these concerns involved China given the current weakness being recorded in economic data and in earnings from companies doing business in China.
Disappointing earnings from Caterpillar Inc. (heavy machinery) to Nvidia Corp (computer chips) were both blamed on a sudden slowdown in demand from China, a country which accounts for a major share of global oil demand growth and which contributes about a third of global growth.
On Wednesday high level trade talks between China and US will resume in Washington. Tensions, however, worsened yesterday after US prosecutors filed criminal charges against China’s Huawei. In addition the US may on the same day file a formal extradition request to Canada for Huawei’s CFO Meng Wanzhou, the daughter of the company’s founder.
These macroeconomic and geopolitical developments continue to support an elevated correlation between crude oil and the S&P 500 index, a proxy for growth expectations.
Disappointing earnings from Caterpillar Inc. (heavy machinery) to Nvidia Corp (computer chips) were both blamed on a sudden slowdown in demand from China, a country which accounts for a major share of global oil demand growth and which contributes about a third of global growth.
On Wednesday high level trade talks between China and US will resume in Washington. Tensions, however, worsened yesterday after US prosecutors filed criminal charges against China’s Huawei. In addition the US may on the same day file a formal extradition request to Canada for Huawei’s CFO Meng Wanzhou, the daughter of the company’s founder.
These macroeconomic and geopolitical developments continue to support an elevated correlation between crude oil and the S&P 500 index, a proxy for growth expectations.
The above-mentioned developments highlights why the oil market remains range-bound with the focus evenly split between supply and demand concerns. However, not all oils are equal and the prospect of lower supply of heavy barrels from Venezuela has supported a pick-up in the price of heavy crude oil varieties from Mexico and Canada.
Brent and WTI crude oil meanwhile remain stuck in their established ranges with plenty of potential market moving events presenting themselves over the next 48 hours. The three most important are US-China trade talks in Washington, EIA’s weekly stock report and the Federal Open Market Committee meeting.
Brent and WTI crude oil meanwhile remain stuck in their established ranges with plenty of potential market moving events presenting themselves over the next 48 hours. The three most important are US-China trade talks in Washington, EIA’s weekly stock report and the Federal Open Market Committee meeting.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Q4 Outlook for Traders: The Fed is back in easing mode. Is this time different?
John J. Hardy
Global Head of Macro Strategy
The Fed launched a new easing cycle in late Q3. Will this cycle now play out like 2000 or 2007? -
Quarterly Outlook
Q3 Investor Outlook: Beyond American shores – why diversification is your strongest ally
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Q3 Macro Outlook: Less chaos, and hopefully a bit more clarity
John J. Hardy
Global Head of Macro Strategy
After the chaos of Q2, the quarter ahead should get a bit more clarity on how Trump 2.0 is impacting... -
Quarterly Outlook
Upending the global order at blinding speed
John J. Hardy
Global Head of Macro Strategy
We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ... -
Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever
Jacob Falkencrone
Global Head of Investment Strategy
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Equity Outlook: The ride just got rougher
Charu Chanana
Chief Investment Strategist