Vijay Valecha, Chief Investment Officer, Century Financial on Global Markets, Cryptos, Crude Oil, Gold updates
U.S. oil futures post biggest daily drop since November as Saudi price cut raises demand worries: Oil futures start the week with a hefty loss as Saudi price cuts underline fears about demand.
Shell Flags Impairment Hit of up to $4.5 Billion: Shell said its fourth-quarter earnings took a hit of up to $4.5 billion in impairments that were offset by significantly higher gas trading, while its overall production volumes are on track to meet targets.
Saudis cut crude prices to all regions amid oil-price weakness: Saudi Aramco on Sunday said it would cut crude prices to all regions, including its largest market in Asia — a move that comes amid weaker global oil prices.
Exxon Mobil Expects Up to $2.6 Billion in Upstream Impairments: Exxon Mobil is expecting up to $2.6 billion in impairments in the fourth quarter for its upstream business, mostly related to idled assets in California.
U.S. Crude Oil Stocks Fell 5.5 Million Barrels Last Week: U.S. crude oil inventories fell more than expected last week, while stocks of gasoline and distillate fuels saw large increases pointing to sluggish demand for products.
The ADX General is rising for the third day, climbing 0.4%, or 42.33 to 9,753.91 in Abu Dhabi. First Abu Dhabi Bank PJSC contributed the most to the index gain, increasing 2.8%. Hayah Insurance Co. PJSC had the largest increase, rising 7.4%. In midday trading, 25 of 69 shares rose, while 14 fell.
The DFM General Index is rising for the fourth day, climbing 0.6%, or 22.91 to 4,112.31 in Dubai. Dubai Electricity & Water Authority PJSC contributed the most to the index gain, increasing 1.6%. SHUAA Capital PSC had the largest increase, rising 5.0%. In midday trading, 16 of 35 shares rose, while 5 fell.
The Tadawul All Share Index opened slightly higher at 12,255.06 in Riyadh. Al Rajhi Bank contributed the most to the index gain, increasing 0.3%. Al-Baha Development & Investment Co. had the largest increase, rising 7.1%. In early trading, 114 of 230 shares rose, while 89 fell; 14 of 20 sectors were higher, led by banks stocks.
Oil held the largest drop in about a month on signs of a weaker physical market, including a deep pricing cut by OPEC+ leader Saudi Arabia. Global benchmark Brent traded near $76 a barrel after tumbling by 3.4% on Monday to unwind all of the previous week’s gains, with US marker West Texas Intermediate under $71. Riyadh reduced its prices more than had been expected, with prices of other Middle Eastern crudes also declining. Underscoring the weakness were speculators starting 2024 by making one of their biggest bearish shifts on oil prices in years. Investors added about 61,000 combined shorts in Brent and WTI in the week to Jan. 2, according to Intercontinental Exchange Inc. and Commodity Futures Trading Commission data. That was the most since March, and the second-largest increase since 2017.
US stocks
Major U.S. stock indexes experienced gains on Monday, fueled by a more than 2% surge in the Nasdaq 100 and a 1.4% rise in the S&P 500, primarily driven by advances in U.S. tech-related shares. Nvidia’s impressive 6% surge contributed significantly to the benchmark’s rise as the company unveiled new products aimed at leveraging artificial intelligence for personal computers. The move coincided with falling Treasury yields ahead of inflation readings and new government debt supply. The benchmark 10-year U.S. Treasury yield hit a session low of 3.966%. While SPX 500 closed above trendline resistance at $4730, clearing $4750 is crucial for targeting $4775. Strong support levels are identified near $4700 and $4660.
Dollar
The U.S. dollar and Treasury yields eased as investors awaited U.S. inflation data and assessed the timing of potential interest rate cuts by the U.S. central bank. A New York Federal Reserve report indicating lower consumer expectations for inflation, income, and spending over the next few years reinforced expectations for imminent Fed cuts. However, some analysts suggest the market’s anticipation of monetary easing might be excessive. The Dollar index traded modestly higher at 102, with resistance and support at 102.80 and 101.60, respectively.
Gold
Gold prices recovered some lost ground during the early Asian session on Tuesday. Concerns about the possibility of the U.S. Federal Reserve maintaining a restrictive stance for an extended period could exert selling pressure on gold in the near term. Traders are awaiting fresh impetus from the U.S. Consumer Price Index (CPI) on Thursday. Gold is currently near $2,035, corresponding to the 21-day SMA, and a sustained move above could target $2050, with support around the 50-day SMA at $2012.
WTI
Oil prices witnessed a more than 3% decline on Monday due to significant price cuts by top exporter Saudi Arabia and increased output by OPEC. This offset concerns about supply disruptions arising from escalating geopolitical tensions in the Middle East. Support and resistance levels for WTI crude are identified at $69.1 and $73.5, respectively.