Yet another flash of violence in the Middle-East broke out last week, but how much did it affect the price of that oh-so-crucial black stuff? And how long will that price movement last? As usual, the Contentworks team are here to offer unique analysis of last week’s actions, as well as giving you our breakdown of all the important market events over the coming week. Ready? Let’s go!
What’s going on?
Truth be told, no one is really that sure! A week has now passed since a mystery joint drone and missile strike hit the Saudi Khurais oil facility, knocking 5.7 million barrels of oil per day out of production — which constitutes a dent in the entire global oil supply of 5%. Wow!
What we do know is that Saudi Arabia and the US are quite insistent in pointing the finger of blame squarely at Iran. That last point isn’t insignificant, either. IF this was Iran, or the Iranian-backed Houthi rebels (who have claimed responsibility for the attack), this could plunge the region into yet another conflict — something that could quite easily send oil prices through the roof.
So, what did happen to the black stuff?
Well, it wasn’t exactly uneventful! Brent crude initially surged 20% at the start of trading, last Monday, but later eased back to end at $69 a barrel, up 14.6%. US oil prices closed the day up 14.7%, the biggest jump since 2008.
At the time of writing, Brent prices have fallen further down to $64.77, partly thanks to the US president, who agreed to release US reserves into the market. Aw, what a thoughtful chap he is!
The race is now on for Saudi Arabia to get back into full production mode. Despite this explosive setback, they’re being remarkably chirpy on the matter, stating that oil production will resume as normal by the end of September. Pretty neat!
This story is far from over, though. Will the Saudis hit that not-exactly-conservative target? What will happen if they don’t? Was it Iran, or someone else? Will further attacks happen? Will a US-led pre-emptive strike occur before they do? Many questions, zero answers (even our office crystal ball isn’t giving us anything). This is one for traders to keep their eyes on. You’ll want to be ready if and when those answers come rolling in.
Don’t Miss These Market Events!
We totally get it, you’re a busy bee. You’re juggling a lot of stuff, you only have two hands and you’re way too busy to spend hours trawling the internet looking for information that might help your trades. Oh boy, do we get it! But, the awesome news for you, weary trader, is that we’re here to lighten your load just a little bit. Your internet trawling days are behind you. Here is everything you need to have on your trading calendar this week (you’re welcome).
● Monday is PMI day, both for Germany (Manufacturing) and the EU (Composite). The German Manufacturing Purchasing Managers Index (PMI) highlights business conditions in the manufacturing sector. As you know, both Germany and the EU are highly reliant on German manufacturing, so this is a crucial release and has the potential to cause some real EUR volatility.
Additionally, the monthly EU report gives a good breakdown of the current health of bloc-wide manufacturing companies.
● Off to Japan on Tuesday for Bank of Japan Governor, Haruhiko Kuroda’s Tokyo press conference regarding monetary policies. Not one to miss if the yen (JPY) is your currency of choice.
● Thursday is a BIG day for USD traders, it’s the release of the Annualised GDP (Q2). This will give a key insight into how fast or slow the US economy is growing or shrinking, which has a major impact on almost every other measurable. Don’t miss it!
● We stick around in the US for the end of the week, which sees the release of the Non-defense Capital Goods Orders Excluding Aircraft report. This measures the cost of capital goods orders — excluding the defense and aircraft sectors. Again, a key signifier of the US economic situation.
● Keep an eye on the GBP in the light of the #Thomascook collapse. With 22,000 jobs gone overnight, this will surely have an impact on the markets.
That’s all we’ve got time for this week — this part always comes around way too soon for us. Do you get sad when we say goodbye, too? If you’re into our content, then perhaps your traders or investors would be interested as well? If you’re looking for a weekly report like this, drop us a line and we’d love to create a tailored solution, just for you.
The Contentworks Team