OPEC Meets to Discuss on Oil Prices
- 3 December 2018
Fundamental Outlook Last week, the U.S. Federal Reserve Powell was criticized by President Trump of favoring rate hike policy that has caused prices slump in Dow market. Soon after Trump’s remark, Powell held a press talk and commented that FED fund rate is near to neutral benchmark and lifted the stock markets.
Saudi Arabia signs a letter of offer and acceptance to purchase USD15 billion worth of THAAD missile system. Market analysts interpret this as a closure of Khashoggi’s murder case after President Trump commented earlier of his preference to maintain business relationship with Saudi than to pursue the mastermind of murder, which could be linked to the royalties.
China reports an unexpected fall in manufacturing index as the November reading at 50.0 benchmark, first time since August 2016. Media is focusing on the Trump-Xi talk on coming G20 meeting this week, though most analysts do not expect positive outcome from the trade negotiation.
OPEC members and Russia will meet on 6 December in Vienna to discuss on the adjustment of oil prices in international market. Saudi has committed not to induce another supply glut while most oil producing countries are favoring on oil recovery to increase their revenues. Despite that, U.S. President Trump has openly reiterated many times to prefer low oil prices in order to contain inflation.
Technical Forecast USD/JPY traded in narrow range last week largely from 113.00 – 114.00 region. This week, we forecast the selling pressure will emerge rather strong on the topside region while the trend is prone to falter at 111.00 level. Dollar strength is essentially import to be observed as a main lead to Yen on inverse correlation.
EUR/USD stood on 1.1250 support last week and recovered to 1.1400 region. This week, we foresee the trend will be sideways in mixed sentiment from 1.1250 – 1.1500 region. Breaking in either direction will lead into a new headway while depending on Dollar clue.
GBP/USD rattles in tight range from 1.2730 – 1.2830 due to the uncertainty of BREXIT deal. Traders are watching closely on the progress of negotiation between Prime Minister May and European Commission on the terms of leaving EU bloc in April 2019. This week, we reckon the trend will move from 1.2700 – 1.2900 range in caution and sensitive to ongoing news of BREXIT deal.
Gold prices have been trading from USD1210 – USD1230 /oz amid mixed sentiment. Basically, we have seen strong bargain-hunting in the market but firm Dollar is still a crucial factor to weigh on yellow metal. This week, we foresee the market will thread in abovementioned range but with a likelihood of surging towards weekend. Technically, piercing above USD1240 /oz will gather a new strength to drive higher to USD1270 /oz.
WTI Crude prices have been consolidating from USD50 – USD52 /barrel in tight range. This week, the outcome of OPEC meeting will be an important factor to lead the market trend out of the constriction. Fundamentally, we are prone to see a short-covering and aim at USD55/barrel if the USD52 /barrel resistance is broken. However, beware of unexpected fall beneath USD50 /barrel in case the meeting in Vienna on 6 December fails to hold the oil prices.
Silver prices traded in flat pattern for another week with low demand. Technically, we have identified the range to be USD14.00 – USD14.50 /oz and the likelihood to bounce is potential. Ultimately, we believe the pierce above the USD14.50 /oz resistance will lead to a new bullish trend in near future. Based on the XAU/XAG ratio chart, precious metals in Gold and Silver are bottoming out and soon will rise!
Crude Palm Oil (FCPO) Futures on Bursa Derivatives ended higher on Friday after the market expectation on lower output has lifted the trend. On Friday, February contract closed at RM2039 /MT in short-covering. This week, we foresee the market will continue to strive higher with support resting at RM2000 /MT region. Topside recovery aims at RM2150 /MT in case of breaking above RM2070 /MT immediate resistance.
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DAR Wong and Chong HC are the market strategists in APSRI on CPO markets. DAR has 29 years of trading and hedging experiences while HC trades for 11 years and now coaches institutional customers. They can be reached at www.pwforex.com