United States and Chinese trade relations appear to have hit a new low after White House trade adviser Peter Navarro said that the trade deal was “over” on Fox News last night. Navarro later walked back his comments and said that his comments were taken out of context and, “was simply speaking to the lack of trust we now have of the Chinese Communist Party after they lied about the origins of the China virus and foisted a pandemic upon the world.”
Federal Reserve Chair Jerome Powell provides twice-a-year updates to Congress regarding the outlook for the U.S. economic growth. Today he will be testifying before Congress and the expectations are for a positive update.
This morning, WTI crude oil prices traded as low as $52.13/barrel, the lowest level since October of last year. With threats of the Coronavirus spreading, travel and trade have become a factor in this sell off. With the fear of the disease spreading until there is a vaccine, traders forecast travel will be subdued, meaning oil demand will decrease and thus so do oil prices.
As the end of this week winds down and people prepare for the holidays next week, light liquidity will most likely be the name of the game in our energy markets. Light liquidity means trading volume is lower than normal which is to be expected during this time of year. Therefore, the bid/ask spreads are wider. Meaning that if the computer-driven trading houses decide to either buy or sell a lot of volume, the market can move violently in one direction rather quickly. What does this mean for our industry? This means that our customers can be very opportunistic especially if we see a retracement in prices after this rally we’ve seen since the beginning of December.
The volatility of the China-United States trade war may finally be slowing down. Only a few days after agreeing to phase one of a new trade deal, China has announced a one-year tariff exemption on six chemical and oil derivatives, a positive sign that tensions are easing, and progress is being made. These exemptions become effective on December 26, 2019 and are set to expire on December 25, 2020.