Making sense of market moves
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It turns out that September’s market volatility isn’t just relegated to equities, bonds, and gold.
Oil has been on a rollercoaster over the past week, hitting a nine-month low yesterday when benchmark prices dropped more than 4% in a single day. Over the past week, prices for Brent crude futures fell roughly 11%—basically erasing its gains from the first two quarters of the year.
The decline in prices was partially fueled over reports of a deal to resolve a dispute between two political factions in Libya that led to a pause in oil production back in August.
In addition, data from China over the weekend showed that manufacturing in the country sank to a six-month low in August, meaning demand could cool even further in the region. And in the US, the Institute for Supply Management reported on Tuesday that US manufacturing remained weak.
It’s all in the hands of OPEC+
Crude oil initially clawed back some of its 2024 gains this morning. The short-lived recovery came on the news that OPEC+ nations are thinking about postponing their previously planned increase in oil output next month due to price volatility, Reuters reported.
However, crude continued to sink throughout the afternoon, eventually falling below the key support level of $70 to a new nine-month low of $68.83.
Even though instability has rocked the oil market, most analysts remain bullish on oil prices and gas stocks in the long run. Chief Investment Officer at Bleakley Financial Group Peter Boockvar wrote earlier this summer that, even as geopolitical conflict takes a bigger toll on the market, “We continue to be positive and long oil and gas stocks.”
UBS’s year-end target for Brent oil is $87 per barrel, which analysts reiterated in late July—over 24% higher than where oil trades today—LB