MARKET VIEW
Weekly changes: XBRUSD +4.34%
The oil prices are rebounding to multi-year highs. XBRUSD settled near a three-year high at 77.25 USD, its best level since October 2018.
BULLISH TRIGGERS
Oil demand will be growing steadily amid the ongoing economic recovery while the supply outlook remains stable thanks to production discipline by OPEC+. The latest EIA report shows that U.S. crude stockpiles declined for the seventh consecutive week. According to the U.S. Energy Information Administration, U.S. crude inventories fell by 3.5 million barrels last week. India’s oil imports hit a three-month peak in August.
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BEARISH TRIGGERS
There might be a significant downwards correction, according to Bloomberg Intelligence senior commodity strategist Mike McGlone. He notes that the last two influential crude declines in 2018 and 2020 were almost tick-for-tick with SPX500. The 20-quarter correlation between the Bloomberg Commodity Spot Index and SPX500 currently sits at 0.90, the highest reading since 1960. The BI analyst says the last time the correlation peaked was back in 2013, followed by the spectacular oil price crash of 2014, which then spread to the rest of the commodities complex.
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