Crude oil tumbled well over $US2/barrel overnight on what appears to be disappointment towards the market’s reaction to further production cuts by Saudi and a major downgrade from Goldman Sachs i.e. they are now calling December Brent at $US86 compared to $US95 previously. It feels to use that the bulls are starting to capitulate as China’s economy struggles to recover from strict COVID lockdowns and hawkish central banks pressure their respective economies with rate hikes.
- No change to our recent view, we believe crude oil is now “looking for a low” but it may take a spike below $US70 before it’s posted.
MM is now bullish toward crude oil medium term
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Copper has bounced from $US350 support but it’s not a convincing move (yet) as global recession fears continue to increase courtesy of rising interest rates and a weak China recovery. However, the smart-money commercial traders are heavily skewed to the net long side which delivers a historically reliable read-through that copper prices are looking for a low i.e. a similar view that MM holds towards oil.
- We believe that the next 20% move by copper is on the upside but a catalyst appears required to ignite the move.
MM remains bullish toward copper medium term
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