IEA forecast record global oil demand | 18 August 2023

#SP500:

U.S. equity funds saw heavy outflows in the seven days to Aug. 11 amid investor caution ahead of the U.S. inflation data and concerns over credit rating downgrades in the banking sector. While there is strong support for stocks being in a bull market, overbought conditions, weak seasonality, rising interest rate volatility, and ongoing uncertainty over monetary policy suggest a shorter-term pullback in this rally could be underway. History suggests a 5-10% drawdown between now and year-end is not uncommon, even during years with strong rallies into August. However, even with a drawdown, the S&P 500 has still historically generated positive average returns into year-end.

Trading recommendation: sell 4501 and take profit 4397.

XAUUSD:

Inflation is still considerably above the 2% level where the Federal Reserve would like to see it but the trajectory is encouraging. So far, the data suggest the Fed will likely pause at the next meeting but no guarantees about the meeting after that. Good news on the inflation front and it once again confirms that inflation is going in the right direction. And markets are building on to early gains. But whether or not this will be sufficient for the Fed to declare victory on inflation is somewhat spotty. They would want to get more information, but the good news is that the core inflation is moving in the right direction, actually faster than top line inflation.

Trading recommendation: sell 1925 and take profit 1898.

#WTI:

Oil prices edged higher after the International Energy Agency forecast record global demand and tightening supplies, propelling prices to the seventh straight week of gains, the longest such streak since 2022. The IEA estimated that global oil demand hit a record 103 million barrels per day in June and could scale another peak this month. Meanwhile, output cuts from Saudi Arabia and Russia set the stage for a sharp decline in inventories over the rest of 2023, which IEA said could drive oil prices even higher. Supply cuts and an improving economic outlook have created more optimism among oil investors.

Trading recommendation: buy 80.25 and take profit 82.80.