Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
💎 Reveal Undervalued Stocks Hiding in Any Market Get Started
The Devil Is Always In The ISM Details And Can OPEC Deliver More Barrels?
www.investing.com/analysis/the-devil-is-always-in-the-ism-details-and-can-opec-deliver-more-barrels-200625209
The Devil Is Always In The ISM Details And Can OPEC Deliver More Barrels?
By Stephen Innes | Jun 02, 2022 01:00AM ET Markets
US equities were weaker Wednesday, with the S&P down 0.7%. US10yr yields up 6bps to 2.91%, and Bunds up 6bps as well, to 1.18%.
Equities are trading lower again as the employment piece of ISM manufacturing contracted and the prices paid component remains elevated.
If investors did not take kindly to Tuesday's higher than expected inflation print in the Eurozone, they were mortified by the sticky US inflation print as the devil is always in the ISM data details.
Higher than expected inflation, good new orders and mixed employment data are the perfect cocktails for the market to price in a higher US terminal rate scenario.
Anything that keeps the Fed on a more aggressive rate-hiking path will pull the rug from under any semblance of sure-footed equity markets.
With the Fed hikes back on the boil, I expect the Chinese markets to continue shedding recent gains, particularly in the tech sector.
Oil
Traders are debating if the likes of Saudi Arabia are becoming worried about demand destruction or, at least, want to reset relations with the US by opening up the doors to swing producers to pump more oil.
OPEC and non-OPEC members are meeting later today in a discussion framed by Russia missing its production quota for several months.
An OPEC meeting that drives oil prices higher would likely elicit an economic consequences trade, especially around the global end-demand outlook; hence I think the bounce would be capped in this risk-off environment. HOWEVER, an OPEC supply-driven lower oil price reaction would be a godsend to international risk markets, especially in Europe.
So, the million-dollar question is, can OPEC even offset lost Russian production.
While several OPEC+ members have struggled to increase production in recent months, Saudi production has moved steadily upwards—from ~8.1mb/d in March 2021 to 10.3mb/d in April this year, according to OPEC's latest monthly report, but remains well below total theoretical capacity.
Similarly, Kuwait, Iraq, and the UAE have managed to raise production and are below theoretical capacity.
Given that OPEC tends to respond at a snail's pace to market developments, there was a lot of skepticism in oil price prices overnight, suggesting the market is still erring in the base case camp.
But the potential for a shift in strategy and quotas does bring a new downside risk for oil that has not received much focus until now.
But hold on to your hats; it could be a wild ride on the oil market roller coaster today, especially if OPEC signals more barrels are on the way.
Related Articles
A Federal Reserve Pivot Is Not Necessarily Bullish
By Michael Lebowitz - Mar 29, 2023
6
An old saying cautions one to be careful of what one wishes for. Stock investors wishing for the Federal Reserve to pivot may want to rethink their logic and review the charts. The...
Fixing Banks, It’s Not That Complicated
By Axel G. Merk - Mar 30, 2023
When you’re in a hole, stop digging. Seriously. It’s frustrating to see policymakers make the same mistakes as in 2008. There are real solutions on the table. They are...
Stock Market Recovery Continues as Investors Eye Jobless Claims
By Craig Erlam - Mar 30, 2023
Stock markets are in the green once more on Thursday, with confidence slowly returning as we near the end of the second week without serious drama. Of course, I’m not...
The Devil Is Always In The ISM Details And Can OPEC Deliver More Barrels?
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.