{"id":21661,"date":"2023-06-12T16:43:07","date_gmt":"2023-06-12T20:43:07","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/commodities\/oil-delivers-surprise-4-drop-opposite-to-saudi-wish-amid-fed-watch\/"},"modified":"2023-06-12T16:43:07","modified_gmt":"2023-06-12T20:43:07","slug":"oil-delivers-surprise-4-drop-opposite-to-saudi-wish-amid-fed-watch","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=21661","title":{"rendered":"Oil delivers \u2018surprise\u2019 4% drop opposite to Saudi wish amid Fed watch"},"content":{"rendered":"
\n

Investing.com — A week after the Saudi bid to surprise the oil market, traders are indeed surprised over how far it is going in opposite to Riyadh\u2019s wishes.<\/p>\n

Crude prices tumbled as much as 4% Monday in a takedown that sent U.S. benchmark West Texas Intermediate, or WTI, nearer to its $65 per barrel support, and the global benchmark Brent to almost $70.\u00a0<\/p>\n

The Saudis need Brent to be at $80 at least (which means WTI has to be at $85 or more, given the minimum $5 premium for the global benchmark) and have offered to take 2.5 million barrels off their regular daily production of 11.5M via three cuts announced since November.<\/p>\n

Last week, the Saudis offered their latest cut of one million barrels per day. That came after its 12 partners in OPEC, or the Organization of the Petroleum Exporting Countries, and 10 other allies, including Russia, in the OPEC+ alliance decided to stay pat on production.<\/p>\n

But the market has rarely been on the same page with the Saudis.\u00a0<\/p>\n

Over the past six months, Brent briefly crested at $87 before returning towards $70 support on several occasions. WTI\u2019s highest has been $83 plus versus lows of beneath $64 at one point.<\/p>\n

Even Wall Street\u2019s biggest bull \u2014 Goldman Sachs\u00a0\u2014 cut its forecast for Brent on Monday, announcing a December average of $86 versus a previous $95. For WTI, it called a barrel at $81, down from $89.<\/p>\n

Technical charts are showing a bigger drop likely. \u201cOil bears have been eyeing the 100-month Simple Moving Average of $59.60,\u201d said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.<\/p>\n

John Kilduff, partner at New York energy hedge fund Again Capital, adds:<\/p>\n

\u201cThe Saudis are keen to show their ability to positively surprise this market. Instead, what the longs in oil are getting these days are more negative surprises, sometimes those that are right down nasty.\u201d<\/p>\n

One of those emerged on Monday when New York-traded crude for July delivery settled down $3.05, or 4.4%, at $67.12 per barrel after a session low at $66.83. Prior to that, the U.S. crude benchmark had lost 3.5% over a two-week stretch.<\/p>\n

London-traded officially finished Monday\u2019s New York session at $71.84 per barrel, down $2.95, or almost 4%. Brent lost 2.8% over two prior weeks.<\/p>\n

Oil\u2019s latest tumble on Monday came ahead of key inflation data and a Federal Reserve decision that could set the direction for risk-taking across markets.<\/p>\n

On Wednesday, the Fed\u2019s policy-making committee is expected to vote for a break from a rate hike campaign that started in March 2022. The Fed pivot is widely anticipated despite an economy that\u2019s still resilient and feeding inflation, contrary to persistent talk of recession.<\/p>\n

Just ahead of the central bank\u2019s , will be the May reading for the on Tuesday.\u00a0<\/p>\n

The so-called CPI hit 40-year highs in June 2022, expanding at an annual rate of 9.1%. Since then, it has slowed, growing at just 4.9% per annum in April, for its slowest expansion since October 2021. The Fed\u2019s favorite price indicator, the , or PCE, Index, meanwhile, grew by 4.4% in April. Both the CPI and PCE are, however, still expanding at more than twice the Fed\u2019s 2% per annum target for inflation.<\/p>\n

Bloomberg provided just before the weekend a snapshot of analysts’ thoughts to show divided markets \u2014 and the Fed itself \u2014 were on a stay in rates:<\/p>\n

\u201cThose who prefer to skip a hike in June want to wait and see \u2014 given the long and variable lags of monetary policy \u2014 how 500 basis points of rate hikes to date are cooling the economy. More hawkish members are convinced rates aren\u2019t yet restrictive enough, and the Fed shouldn\u2019t risk falling behind the curve. We see a \u2018hawkish skip\u2019 as a way to maintain unanimity on the committee.\u201d<\/p>\n

Oil bulls also have a new problem \u2014 or rather, an old problem threatening to become new: an offer by Iran\u2019s supreme leader to reopen negotiations with the West for a nuclear deal that could put some sanctioned Iranian crude back on a market already worried about demand.<\/p>\n

Ayatollah Ali Khamenei said that a deal was possible if Iran\u2019s nuclear infrastructure was kept intact. His comments came just a few days after both Tehran and Washington denied reports that an interim nuclear deal was close. They reignited fears of a nuclear deal, given that it could flood the market with supply as sanctions on Iranian crude exports are lifted.<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Investing.com — A week after the Saudi bid to surprise the oil market, traders are indeed surprised over how far it is going in opposite to Riyadh\u2019s wishes. Crude prices tumbled as much as 4% Monday in a takedown that sent U.S. benchmark West Texas Intermediate, or WTI, nearer to its $65 per barrel support, […]<\/p>\n","protected":false},"author":1,"featured_media":2233,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[242],"tags":[83],"class_list":["post-21661","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-commodities","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nOil delivers \u2018surprise\u2019 4% drop opposite to Saudi wish amid Fed watch | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Investing.com -- A week after the Saudi bid to surprise the oil market, traders are indeed surprised over how far it is going in opposite to Riyadh\u2019s\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link 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