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Expect for Drastic Changes in Oil and Stock Market
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My oil prediction became a reality. On the contrary to market expectations, I have foreseen a price decline in oil and I also gave the timing for it: January 2007. After a two-day slide in oil prices totaling almost 9 percent, crude moved above the $56 level Friday, confirming predictions made earlier in the day that the selloff was nearly over - at least for now.
Two factors could keep oil from falling lower than the mid-$50s: OPEC production cuts and declining crude supplies.If there was no accord in OPEC, the price could see below 50.
Traders are also watching for the return of cold weather to the Northeast United States, the world's largest heating oil market.
On Friday, Reuters reported that Libya's top oil official, Shokri Ghanem, said OPEC may need to meet in February or March to address the issue. The comments could be interpreted as a call for a special meeting before OPEC's next regularly scheduled meeting March 15.
The recent decline to around $55 a barrel is the result of several factors, including a relatively stable geopolitical scene and slowing economic growth in the United States.
A big factor is the higher-than-normal temperatures that have sapped demand for heating oil in the Northeast, the world's largest heating oil market.
But at the same time there has been a big drop in crude supplies, as reported by the government each week: Crude stocks fell by 1.3 million barrels this week, 8.1 million last week and 4.3 million the week before.
The only thing might increase the prices to $70-80 barrel is the developments regarding to Iran.Otherwise the trend looks downward.Then it goes upwards because of geopolitical considerations.
US Stock Market
US Stock market there doubts about expected company profits.However the U.S. economy will likely pick up again this year while price pressures ebb, but inflation remains a challenge for policymakers. That’s why I expect a rate increase this year.
I expect U.S. economic growth to accelerate slightly this year, unemployment to remain low and price pressures to ease a bit but stil above comfort zone.
Inflation has been and remains a challenge, though recent data provide a bit of assurance that price pressures may be beginning to ebb however as such, the Fed should keep its focus on containing inflation.
Fed officials raised interest rates steadily until June as they aimed for a "soft landing" in which economic growth slowed enough to curb price pressures while avoiding a recession.
Government data on Friday showed a surprisingly strong jobs market, increasing prospects that the Fed would remain on hold for some time.
U.S. Treasury debt prices tumbled after the jobs report, pushing yields up from one-week lows.
The U.S. economy added 167,000 jobs in December, well above the 100,000 new jobs Wall Street economists had forecast. The unemployment rate was unchanged from November at 4.5 percent.
Average hourly earnings climbed 0.5 percent in December, the largest monthly increase since a 0.6 percent jump in April.Employment trends remain solid while equity markets were upbeat. |
| Tarih
: 08.01.2007 |
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Copyright
© 2006 Mert TOKER All Rights Reserved. |
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