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Oil Bears Are Taking Over Control

Shale Permian

Brent crude fell back below $59 this week as the world moved on from Saudi production outages and back into its increasingly familiar negative macro funk. Oil is now trading below where it was prior to the drone strikes on Saudi production facilities and we remain amazed that this event- which knocked out 5.7m bpd of supplies- has failed to have any sort of lasting bullish impact on crude prices. For now it seems the negative global economic factors impacting the oil market are simply too strong to allow for any sort of upside risk even in the face of extraordinary unplanned supply outages.

On the macro side, US Dollar strength and poor manufacturing data were the main bearish factors impacting crude markets this week. In economic data the US ISM printed 47.8 for September for its second straight contraction-territory mark and its lowest point in ten years. Further east, China’s August PMI came this week with yet another contraction territory thud at 49.8. Both data points increased anxiety among traders who are anxiously awaiting a trade deal between Washington and Beijing with little reason for optimism.

On the currency side, the US Dollar Index rallied to its highest mark in more than two years as the US Federal Reserve has been slower to cut rates than many of its peers. As a result, President Trump continued to lambast his appointed Fed Chair on Twitter arguing that the strong US Dollar is hurting US manufacturers. He's certainly not wrong that a strong…




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