Market News & Analysis


Top Story

OIL MARKET WEEK AHEAD: Oil Earnings Season Starts with Schlumberger

The US earnings season starts next week with Wells Fargo, Citigroup and JP Morgan breaking the ice on Tuesday. Most of the oil majors won’t report until the end of January or early February, but the first insight into how the industry has done in the last quarter will come from oil services firm Schlumberger on Friday. Given that Schlumberger provides services to all the main oil producers and to a number of sovereign governments, Schlumberger’s regional update will give a sense of how the oil project pipeline is progressing.

GLOBAL GROWTH CONCERNS:

The World Bank has slightly revised downwards its global growth forecasts for this year to 2.5%, a touch above the 2.4% growth in 2019. This may become problematic for OPEC as the cartel operates based on a higher growth assumptions for this year and may end up being forced to adjust them downward by the time of its next meeting in March. Demand from developed economies doesn’t show any signs of a turnaround, and with US oil production continuing to expand, the risks seem to be stacking towards a scenario of oversupply. The majority of global growth is still concentrated in the BRIC countries, and China is still leading the growth here. Chinese Q4 GDP and industrial production data next week will show if there is cause for concern for oil investors.

The signing of the US China trade deal, which is expected either on Jan 15 or shortly after, will probably come with much fanfare, but it still remains to be seen which of the punitive tariffs will actually be removed. 

COUNTRY UPDATE: GUYANA  

According to the World Bank, Guyana’s GDP growth is about to jump from 4% in 2019 to 86.7% (!) this year. Most of this growth is expected to come from the country’s oil industry which is expanding at a fast enough pace to catch up with Brazil by 2025. Until now Guyana, which has only a population of 800,000, has mainly produced and exported rice, sugar, aluminum, shrimp and bauxite, but vast new offshore oil production coming on line is about to change that.

Exxon Mobil started pumping the first oil from Guyana just before Christmas and is expected to raise  output to 120,000 bbl/day over the next few months, and eventually to 750,000bbl/day in the next five years. Other international players already active in the country include Tullow Oil, Total SA, Hess and Qatar Petroleum.  

IRAN TENSIONS REMAIN AN ISSUE

For the moment the US and Iran seem to have stepped away from the brink of a conflict, but it would be far too early to dismiss this as a major factor in the market. If the conflict started affecting the Strait of Hormuz, the world’s largest transit route for oil, East Asian countries would be the most impacted. Nearly 80% of the oil leaving the Gulf is destined for China, India, Japan, South Korea and Singapore. The daily flow through the Strait of Hormuz is around 21m bbl/day, or just over 20% of the global supply. There is no fully functional alternative although Saudi Arabia and the United Arab Emirates technically own pipelines that could ship almost a third of that volume via alternative routes.


Source: EIA

When

What

Why is it important

Tuesday 14 Jan 07.00

China Dec Trade balance

Effects of tariffs on Chinese trade

Tuesday 14 Jan 13.30

US Redbook index Jan 10

Health of US retail trade

Tuesday 14 Jan 21.30

API US crude oil stocks

Wednesday 15 Jan 09.00

Germany GDP growth

A proxy indicator of the Eurozone growth

Wednesday 15 Jan 10.00

Eurozone industrial growth

Wednesday 15 Jan

OPEC monthly report

Wednesday 15 Jan

US, China due to sign first phase of trade deal

This is a provisional date

Wednesday 15 Jan 15.30

EIA crude oil stocks

Indicator of domestic demand

Thursday 16 Jan 13.30

US jobless claims

Strength of the US economy

Friday 17 Jan

Schlumberger results

Friday 17 Jan 02.00

China Q4 GDP

Last 1.4%

Friday 17 Jan 02.00

China Dec industrial production

Last 6.2%, slowdown expected

Friday 17 Jan 18.00

Baker Hughes rig count

Friday 17 Jan 20.30

CFTC Commitment of Traders

Money managers positions in oil future


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.