WTI CRUDE OIL - Stocks Slipped As Dollar Rebounds - 11/22/2022 (GMT)

STATE OF THE MARKETS
Stocks slipped as Dollar rebounds. US stocks edged lower on Monday as investors continue to reposition their portfolio ahead of the Thanksgiving Holiday. The tech-laden Nasdaq (-1.09%) fell the most, followed by Russell (-0.57%), S&P (-0.39%) and Dow (-0.13%) as the Dollar index continued to climb higher nearing the 108 handle. Demand for bond’s safety was little changed as yields stalled across the board, with the shorter 2Y hovering around 4.50% while the 10Y benchmark revolved around 3.80%

In the commodity markets, crude oil dropped to a low of $75.25/bl after WSJ’s report of Saudi’s plan to increase production. Denial by Saudi’s energy minister, quickly reversed the drop and settled the black gold back to $80.20/bl. Dollar strength continues to weigh on gold that had dropped since last Wednesday. The precious metal settled below $1,737.70/oz as New York closed. Elsewhere, renewed lockdown in China has dampened demand for major commodities, including iron ore that dropped to $91.50/tn.
In the FX space, Sterling and Kiwi commanded the bids while Yen, Swiss, Aussie and Euro on offers in the short and medium term accounts. Sentiments seemed bullish with the safe haven trios all on offers.

On Tuesday, markets expect to be defensive as more earnings will be released from Medtronic (MDT), Analog Devices (ADI), VMWare (VMW), AutoDesk (ADSK), Dollar Tree (DLTR), Baidu (BIDU), HP Inc (HPQ), Best Buy (BBY), Warner Music (WMG) and Burlington Stores (BURL) as well as the Richmond Fed’s Manufacturing Index.

OUR PICK – Crude Oil
Demand is here to stay amid winter. We see demand for crude oil will continue to rise given winter that has started in the northern hemispheres. WSJ’s reports of Saudi production increase and subsequent denial seemed like child’s play to manipulate the markets. We are inline with Goldman Sachs and JP Morgan that see crude and Brent to test $100/bl in Q42022. We may re-enter if stopped out and use trailing stop as well as open TP to maximize any upsides.

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