Quarterly Outlook
Equity outlook: The high cost of global fragmentation for US portfolios
Charu Chanana
Chief Investment Strategist
Access both platforms from your single Saxo account.
Dollar’s pain no gain for struggling crude oil
Ole Hansen
Head of Commodity Strategy
Summary: Crude oil trade lower on a day where commodities in general are benefiting from the dollar's renewed weakness. The energy market remains troubled by too much supply at a time of where a rise in the number of global coronavirus cases once again raise concerns about the direction of global fuel demand.
What is our trading focus?
OILUKDEC20 – Brent Crude Oil (December)
OILUSDEC20 – WTI Crude Oil (December)
____________________________________________________________________________________________________
WTI Crude Oil (OILUSDEC20) and Brent Crude Oil (OILUKDEC20) both trade lower on a day where commodities in general are benefiting from the dollar's renewed weakness. The energy market remains troubled by too much supply at a time of where a rise in the number of global coronavirus cases once again raise concerns about the direction of global fuel demand.
OPEC+ look set to meet on December 1 and decide whether to implement or postpone the previously agreed 1.9 million barrels/day production increase from January. With a vaccine still months away from being rolled out globally, the current slow recovery in fuel demand together with rising production Libya has left the group with a tough decision to make.
With the oil market currently stuck in the low $40’s there is no doubt that the key to short term direction of oil will depend on the outcome of that meeting. The U.S. election on November 3 will be another important driver given the opposite views on energy the two candidates hold. If the polls turn out to be right this time round and Joe Biden ends up in the White House, the market may receive a short term boost given expectations that increased regulations may slow a recovery in U.S production.
These two events are likely to be the main factors determining where Brent crude oil will finish the year within the $38/b to $48/b range we mentioned in our recently published Q4-2020 outlook. For now, both Brent and WTI crude oil remain stuck in ranges with Brent trading near the highs of the recently established range.
We suspect that crude oil, given its ability to withstand the deterioration outlook this past month, may end the year near the top of that range. Having done a great job in stabilizing the oil market, the OPEC+ group would not suddenly throw that overboard. Instead they will adopt a wait and see approach through the U.S. election before deciding on a three month delay to April.
Later today, the U.S. Energy Information Administration will publish its “Weekly Petroleum Status Report”. Some of the weakness seen today has been due to last night’s API report which showed a surprise increase in crude oil stocks while presenting a bigger than expected draw in both fuel products. Whether or not the report can move the needle on a market gone stale and where the focus is elsewhere remains to be seen. As per usual I will publish the result of the report on my Twitter handle @Ole_S_Hansen
In recent weeks both crude oil, gasoline and distillate stocks have declined while refinery demand continues to struggle, currently trailing the five-year average by 2 million barrels/day.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Commodity Outlook: Commodities rally despite global uncertainty
Ole Hansen
Head of Commodity Strategy
-
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
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
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
-
Quarterly Outlook
China Outlook: The choice between retaliation or de-escalation
Charu Chanana
Chief Investment Strategist
-
Quarterly Outlook
Commodity Outlook: A bumpy road ahead calls for diversification
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX outlook: Tariffs drive USD strength, until...?
John J. Hardy
Global Head of Macro Strategy
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy