Crude Prices Sell Off
September 4, 2024
Yesterday saw the energy markets selloff hard in a big down day. The negative economic outlook for China especially and the US as well, and the news that Libya may have a deal to resolve their dispute over oil exports created the selling pressure. There was also news about manufacturing being bad in both China and the US. The US ISM Manufacturing Index rose slightly from July up to a reading of 47.2, which was lower than the 47.5 reading expected by economists. A reading below 50 indicates contraction and US manufacturing has been in contraction (below 50) since March 2024. The overall general sentiment for markets seems to have turned more negative and with no true conviction in the energy markets prices sold off on the news. I even heard comments that this was capitulation, essentially traders giving up on a bullish outcome. Of course, in today’s world of instance information in the next breath some trader is saying where is the value, and that trader will see value and be looking to buy.
Prices sold off yesterday and are down to new lows we have not seen in over a year. It seems like overnight that WTI crude oil is at $70 per barrel. Energy markets have seen a good corrective move lower from recent highs but with the overall sentiment being negative it feels like there is more room to move lower. With a possible deal to get Libyan crude oil production and exports back online and OPEC+ looking to up production in October that prices should feel some more sell pressure. But on the other had there is the hope of an interest rate cut at the next Fed meeting and the idea that OPEC+ doesn’t really want to see prices on crude oil go much lower that something in the narrative will change.
As is always the case, the opinions on the markets are many and there are buyers lurking out there at some level. For now, we need to sit back and see how the markets will progress in the next few days. As is the case all the time with energy markets volatility will remain high.