The three-year lows in oil inventories in the U.S. | 29 October 2021

#WTI:

Oil bulls scored a ninth straight winning week as market attention again turned to the three-year lows in inventories at the U.S. storage hub for crude. The issue is that there is not going to be any opportunity to restock Cushing in the next 3-5 months as runs should stay high. In its weekly inventory update on Wednesday, the U.S. Energy Information Administration put the Cushing stocks at 31.2 million barrels, down from the previous week’s three-year low of 33.6 million. The traders have worried over how oil will react when the Fed begins to taper its $120 billion in monthly government bond purchases.

Trading recommendation: Buy 83.74 and take profit 85.20.

#SP500:

Options traders are showing little fear that U.S stocks will turn volatile in coming weeks, even as the Federal Reserve appears set to announce an unwind of the easy money policies that helped equities double from last year’s lows. Though many investors have worried over how stocks will react when the Fed begins to taper its $120 billion in monthly government bond purchases, the so-far sanguine trading in the options market suggests that market participants are not rushing to buy insurance against volatility over the next few weeks. This is a positive signal for the stock market.

Trading recommendation: Buy 4525 and take profit 4575.

XAUUSD:

Swings in gold were triggered by Federal Chairman Jerome Powell, who during a virtual appearance at a Bank of International Settlements event, confirmed the central bank’s plans to start tapering its monthly stimulus of $120 billion between November and December, while holding out on giving a timeline for rate hikes. Markets had been on tenterhooks for months over the timing of the stimulus taper. With that known, the speculation has moved on to rates. The key takeaway from Powell was that the Fed is on track to begin tapering and that should be done by mid-2022, transitory inflation might last a little longer than expected. This is a negative signal for gold.

Trading recommendation: sell 1811.10 and take profit 1174.30.