Head of Commodity Strategy
Summary: Crude trades up on the day but unchanged on the week ahead of the weekly stock report from the U.S. Energy Information Administration.
WTI crude oil has bounced on renewed trade optimism ahead of the 'Weekly Petroleum Status Report' from the U.S. Energy Information Administration. At $53.50/b the price of CLX9 is more or less unchanged from where it was this time last week. During this time the deteriorating outlook for a trade deal between the U.S. and China helped drive the price to a low $51/b. Thereby almost eclipsing the August low at $50.50/b.
However the unexpected news that China may be open to a partial deal has helped put some optimism back into not only oil but also other commodities such as soybeans. Turkish troop movements on the Syrian border are likely to further have reduced the selling appetite.
In our monthly commodity deep dive held earlier today - replay available Thursday - we highlighted the reasons why we believe that the downside risk, despite economic angst, looks limited from here. The geo-political risk premium following the September attack in Saudi Arabia has been removed but there are still several reasons why it could suddenly re-emerge. So while the pendulum continues to swing between demand and supply worries we suspect that WTI and Brent will stay range bound around $55/b and $60/b respectively.
AI: The good, the bad, and the bubble
While a deep recession may not be iminent thanks to central bank policy, interest rates will have to stay high for longer, and this will be accompanied by volatility risk from the unwinding of bubbles, especially within AI.
Steen Jakobsen,
Chief Investment Officer
The emergence of advanced AI systems is by far the most surprising event this year, turning everything upside down, while risks and benefits are debated. AI will also become an arms race between the US and China.
Peter Garnry,
Head of Equity Strategy
As China navigates global fragmentation, its cycle of technology application, productivity enhancement, and growth is threatened by US breakthroughs in generative AI, limited computing power, and geopolitical tensions.
Redmond Wong,
Market Strategist
Japan’s expertise in semiconductors and robotic integration could be the foundation of AI dominance. Combining two of this year's themes, Japanese equities and artificial intelligence, brings a wave of opportunities.
Charu Chanana,
Market Strategist
The AI fever has turned the technology into a darling, pushing crypto further into no-man’s-land. There are striking similarities between AI and crypto, and if these are to come full circle, AI won't be spared for bubbles.
Mads Eberhardt,
Cryptocurrency Analyst
Stocks related to artificial intelligence (AI) have appeared on investors' radars. Expectations are high, but it may be necessary to consider how to get exposure to AI in a diversified way.
Hans Oudshoorn,
Trainer Academy
The USD is on its back foot as markets celebrate an eventual Fed rate peak and steady long US yields. The stakes are even higher for the Japanese yen if longer major sovereign yield curves have to price in economic acceleration.
John J. Hardy,
Head of FX Strategy
While commodities, broadly speaking, have faced some tough months, a partial reversal during June could signal that the asset class is getting back on its feet with energy holding up and precious metals with upside potential.
Ole S. Hansen,
Head of Commodity Strategy
As inflation remains high central banks face hard decisions about whether they should keep hiking interest rates or stop. Meanwhile, the rise of AI creates bubble-like conditions that only make the decision harder.
Althea Spinozzi,
Senior Fixed Income Strategist
