Oil Market Outlook: Virus, Tesla And Hedge Fund Positioning
Matthew Weller | Jan 26, 2020 12:59AM ET
China will celebrate its New Year festival for the best part of next week, trying for a few days to forget the spread of the coronavirus across the country, while offices and markets remain closed until Friday. But in a nation where a city of a few million is considered small, the density of population and the timing of the virus outbreak during an intense travel period make it very hard to contain the spread of the virus. Though volumes are likely to be slimmer next week, the China virus news flow will keep investors on their toes particularly if the spread of the disease intensifies.
The European Central Bank assumes a scenario in which the Eurozone GDP grew by 1.1% in the last quarter of 2019 and then goes on to maintain that pace of growth in the first quarter of 2020. European oil consumption has closely tracked the Eurozone’s GDP growth over the last few years and has declined gently over the course of 2019.
Though Eurozone growth may not deliver much in the way of surprises, it is worth looking at it in conjunction with German data including the IFO Business Climate measure in January and the GfK Consumer Confidence Index which typically signal the first signs of improvement in Europe’s largest economy and consequently changes in the Eurozone’s growth further down the line.
U.S. Q4 GDP data will be much less of a guessing game with a trend of moderate but steady growth still in place, which will also be reflected in the country’s overall oil demand.
| When | What | Why is it important |
| Monday 27 Jan | Chinese markets closed for New Year | |
| Monday 27 Jan 09.00 | German IFO Business Climate January | Last at 96.3 |
| Monday 27 Jan 15.00 | US Dec new home sales | At 719,000 in November |
| Tuesday 28 Jan | Chinese markets closed for New Year | |
| Tuesday 28 Jan 13.55 | US Redbook Index to Jan 24 | Indicator of the strength of the retail market |
| Tuesday 28 Jan 21.30 | US weekly API crude oil stocks | For week ending 24 Jan |
| Wednesday 29 Jan | Chinese markets closed for New Year | |
| Wednesday 29 Jan 07.00 | Germany Feb Gfk Consumer confidence | Last at 9.6 |
| Wednesday 29 Jan 13.30 | US trade balance | Look out for balance with China |
| Wednesday 29 Jan 15.30 | US EIA crude oil stocks | Last week decline 405,000 |
| Wednesday 29 Jan 19.30 | US FOMC press conference | Rate likely to remain unchanged |
| Wednesday 29 after the market closes | Tesla (NASDAQ:TSLA) Q4 earnings | A proxy for electric car demand |
| Thursday 30 Jan | Chinese markets closed | |
| Thursday 30 Jan 07.00 | Royal Dutch Shell (LON:RDSa) results | |
| Thursday 30 Jan 10.00 | EU Jan Business climate | Last down 0.25 |
| Thursday 30 Jan 11.00 | Brazil inflation index | |
| Thursday 30 Jan 12.30 | Brazil budget balance Dec | |
| Thursday 30 Jan 13.30 | US Q4 GDP | Expected to show an uptick from 1.7% in the last quarter |
| Thursday 30 Jan 13.30 | US initial jobless claim | Key indicator of US economic health |
| Friday 31 Jan 02.00 | China Jan manufacturing PMI | Last at 50.2 |
| Friday 31 Jan | Brexit | Unlikely to move the oil market |
| Friday 31 Jan 10.00 | EU Q4 GDP | European economy expected to show mild sign of improvement from 1.3% |
| Friday 31 Jan 18.00 | Baker Hughes oil rig count | |
| Friday 31 Jan | CFTC commitment of traders | Money managers’ oil positions |
Get The News You Want
Looking at headlines from this year’s Davos World Economic Forum, it is hard to discern what was actually discussed by world business leaders as a majority of the issues have been overshadowed by climate change themes. The car industry took the hint several years ago and will offer more new electric car models than ever before this year. Tesla's (NASDAQ:TSLA) results on Wednesday will be a good proxy for the U.S. appetite for electric cars. The company is expected to report a dip in revenues during 2019, but significantly also a jump in revenues in the last quarter of the year.
h3 Are hedge funds creating a bearish lever? /h3Over the last few months, hedge fund positioning in the oil market has become heavily stacked in favor of higher prices to the point that buy positions stood at 7:1 compared with sell positions. Traditionally this kind of positioning preceded a significant declines in prices.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.