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On October 13th, ING analysts stated in a report that the UK economy is not actually performing as weak as reported in local media, but the risks of tighter fiscal policy and looser monetary policy could put pressure on the British pound. Analysts noted that the market is currently underestimating the extent of future Bank of England interest rate cuts, although the next cut is not expected until February at the earliest. Chancellor of the Exchequer Reeves will be forced to reduce the fiscal deficit through tax increases or spending cuts in his November Autumn Budget. ING added that the appeal of both the British pound and the euro is limited due to political uncertainty in France, but the fiscal and currency risks facing the British pound are "potentially higher."Despite the sparse official economic data releases this week due to the US government shutdown, several Federal Reserve officials are still busy with speeches ahead of the quiet period before the Federal Reserves monetary policy meeting on October 28-29. New Philadelphia Fed President Paulson will deliver her first major speech on Monday, becoming a voting member of the FOMC starting in January. Federal Reserve Chairman Powell is expected to speak on Tuesday afternoon, updating his economic and policy outlook. Newly elected Federal Reserve Governor Milan is also scheduled to attend four separate public events on Wednesday and Thursday.Israel Prison Service: Release of 1,968 prisoners completed.On October 13th, OPEC said on Monday it maintained its forecast for global crude oil demand growth this year and next, and expected the market supply gap to narrow significantly in 2026 as OPEC+ accelerates its production increases. OPEC+ recently increased its crude oil supply efforts following the groups decision to roll back some production cuts more quickly than originally planned. OPEC reported on Monday that while crude oil demand is expected to remain stable, OPEC+ increased its production by 630,000 barrels per day (bpd) in September to 43.05 million bpd, reflecting the implementation of previously approved production quotas. Reuters calculations based on the report indicate that if OPEC+ maintains its September production level, average demand for OPEC+ crude oil will be approximately 43.1 million bpd, implying a global oil market supply deficit of only 50,000 bpd. By comparison, last months report indicated a projected supply deficit of 700,000 bpd in 2026 if production remained at August levels.OPEC Monthly Report: Secondary data showed that Libyas crude oil production increased by 19,000 barrels per day to 1.318 million barrels per day in September.

WTI bulls move in on supply side concerns, but the Fed looms

Alina Haynes

Dec 13, 2022 14:28

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On Monday, the price of West Texas Intermediate, or WTI, crude oil increased as supply-side concerns outweighed fears of weakening demand. At the time of writing, WTI is trading at $73.40, a 0.1% increase from its low of $73.27. It has risen from a low of $73.27 to a high of $73.51.

 

Despite the upcoming US consumer Price index and Federal Reserve meeting, supply concerns have trumped recession concerns in the most recent sessions. The Fed is likely to raise interest rates by 50 basis points on Wednesday, following the release of today's inflation data from other U.S. states, which might bolster the Fed's reputation.

 

"Core prices likely increased by 0.3% month-over-month in November, for the second consecutive month. We anticipate that goods deflation will once again serve as a counterbalance to shelter inflation. Importantly, the November decline in gas prices is anticipated to bring respite to the CPI. Overall, our m/m predictions imply a 7.3%/6.1% YoY increase in total/core pricing," TD Securities analysts stated.

 

The money markets presently assign a probability of about 75% that the US central bank would raise rates by 50 basis points following four consecutive rate hikes of 75 basis points. However, other observers believe that the event will have a hawkish consequence.

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