Weekly Outlook

Weekly Market Overview: Oil prices failed to sustain 2024 gains after oil fell

| 21 October, 2024 at 12:22 GMT

Oil prices failed to sustain 2024 gains after oil fell by almost -6% in the last week, WTI is down by -3.7% YTD, Bent -2% YTD, but what does that exactly mean? It simply means that oil needs more than geopolitical tensions to preserve the bullish performance. It means that the global economy faces huge challenges & energy-transformation that is still going on. China’s refinery output declined for the sixth consecutive month, showing that the country’s shift to EV continued and it is unlikely to weaken anytime soon, China remains the World’s second biggest oil consumer after the US & World’s biggest oil importer.

According to the IEA (chart), the global demand for oil has been cooling in recent years with World oil demand is on course to increase by 900K barrels a day in 2024, down from 2.1 million barrels a day in 2023. OPEC is watching these developments closely; it will be no surprise to see an intervention if oil keeps falling.

Since the beginning of 2024, gold increased by 23.3%, followed by 43% in silver, what a performance that sent silver to $34 per ounce, the highest since 2012. Gold / silver ratio stands now at 80.38 which means that silver is still cheap (undervalued), is the rally in silver sustainable? What happened on Monday morning was silver’s best scenario after PBoC cut the rates again to new lows at 3.1%. With cheaper liquidity & China’s commitment to support the slowing economy, silver will remain on the bullish track for now.

Chart: Tradingview

Even if USD index maintained its gains in 2024 & remained up by 2% , demand for silver & gold remained solid. So, expect further volatility in precious metals before the Fed’s next meeting on November 6^th/2024.

 As for the global equity indexes, last week was another good one in DAX 0.53%, Ftse100 1.14%, Spain 0.36%, SPX 0.03% and Dow Jones 0.46% with both German DAX index & Dow Jones at a record high. As ECB cut the rates by 0.25% in the last week, the risk appetite remained intact. What matters to us now is the Q3 earnings & more macroeconomics from the US before the US Presidential election on Tuesday, November 5^th /2024.

Source: Trading Economics

Bitcoin remained one of the best performing assets in 2024, it increased by more than 60% YTD. What we have noticed is that cutting the rates by PBoC to new lows at 3.1% was another bullish catalyst in the crypto market, yes it is, even if the correlation was not completely positive. Bitcoin traded higher yesterday at $69K, the highest since June/2024. Considering that there will be cheaper liquidity to the markets by the central banks, velocity of the price action & Trump’s trade as well then, we can expect that the bullish sentiment in BTC will continue.

Chart: Tradingview