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With a September Federal Reserve rate cut all but certain, options traders are widely betting on a stable stock market ahead of Thursdays CPI data. However, this bet could be risky if the data shows rising inflation. The markets rationale for a rate cut is straightforward: US job growth is stagnant and the economy needs stimulus. Fridays weak jobs data reinforced this expectation, prompting investors to fully price in a 25 basis point rate cut from the Fed next week. The markets reaction has been muted: US stocks fell slightly on Friday, and the fear gauge edged up slightly, but remains well below the critical 20 level, where it has mostly remained since June. Looking ahead, options traders are betting on a roughly 0.7% two-way move in the S&P 500 following Thursdays CPI release, below the 1% average realized move over the past year. However, this trade ignores a key risk: what if inflation figures significantly exceed expectations? "Its a very delicate balance right now," said Eric Teal, chief investment officer of Comerica Wealth Management. "Any data thats very positive or very negative could change the market outlook."On September 7, U.S. Treasury Secretary Jeffrey Bessant stated that the United States and Europe are discussing a new round of sanctions and secondary tariffs against Russia, hoping that the "collapse" of the Russian economy will prompt Putin to engage in peace talks with Ukraine. "We are ready to increase pressure on Russia, but we need the cooperation of our European partners," Bessant said. He also stated that President Trump and Vice President Cyril Vance spoke with European Commission President Ursula von der Leyen on Friday, and that von der Leyen subsequently discussed sanctions with Bessant.Israel Airports Authority: The first flight from Ramon Airport to Tel Aviv will take off soon.Russian Deputy Prime Minister Novak: OPEC+s production increase plan is beneficial to the Russian economy.Russian Deputy Prime Minister Novak: OPEC+ will make monthly production decisions based on market conditions.

Oil prices fall ahead of an OPEC+ summit

Charlie Brooks

Aug 01, 2022 10:58

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As investors prepared for this week's meeting of OPEC and other major producers to discuss supply modifications, oil prices declined on Monday morning.


At 0000 GMT, Brent oil futures declined 63 cents, or 0.6 percent , to $103.34 a barrel. U.S. West Texas Intermediate oil was trading at $97.87 per barrel, a decrease of 75 cents or 0.7%, after hitting a session low of $97.55 when trading in Asia began.


The price of both futures contracts climbed by more than $2 a barrel on Friday, as the risk appetite of investors grew. However, both Brent and WTI ended July with a second consecutive monthly decline for the first time since 2020, as rising costs and interest rates fueled concerns that a recession would restrict gasoline use.


According to ANZ analysts, gasoline use is below the five-year average for this time of year and fuel sales to British motorists are dropping. In reaction, for the first time since April, experts polled by Reuters cut their projections for the average Brent price in 2022 to $105.75 per barrel and for WTI to $101.28 per barrel.


Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, will meet on Wednesday to set September production.


Two of eight OPEC+ sources questioned by Reuters said that a slight increase for September would be discussed at the August 3 meeting, while the other six sources indicated that output will likely stay constant.


The meeting follows Vice President Joe Biden's visit to Saudi Arabia last month.


While President Biden's visit to Saudi Arabia did not result in immediate oil shipments, Helima Croft, an analyst at RBC Capital, thinks that the Kingdom will continue to gradually increase output.


In 2020, at the beginnings of the COVID-19 outbreak, OPEC+ has completely reversed the dramatic production restrictions enacted at the start of August.


Sunday, the group's new secretary general, Haitham al-Ghais, emphasized that Russia's participation in OPEC+ is important to the success of the accord, as reported by the Kuwaiti newspaper Alrai.


Baker Hughes reports that the number of oil rigs in the United States climbed by 11 in July, marking the 23rd consecutive month of rise.

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