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OPEC Cartel Agrees to Cut Production

  • DAR Wong
  • 10 December 2018

Fundamental Outlook   During the G20 meeting in early December, the long-awaited negotiation between U.S. President Trump and Chinese leader Xi have agreed to enter into a 90-day truce of withholding further tariff. Both parties are willing to explore a solution on reducing the trade imbalance.

Soon after the G20 meeting, Huawei CFO Meng Wanzhou is arrested in Canada and faces extradition to U.S. for trial for violation to Iran’ sanction. The U.S. Government claims Meng for authorizing export to Iran after the sanction commences. Market analysts reckon this will elevate the hurdle of negotiating the trade war between the 2 countries.

OPEC cartel and Russia have completed the meeting in Vienna on 6-7 December. The parties agree to jointly cut daily production by 1.2 million barrels despite the opposition of President Trump. On Friday, Crude prices boosted and pushed the Dollar lower. Gold prices also climbed to 5-month high at USD1245 /oz as safe haven relatively to Dow market slid.

Last week, the U.S. 10Y-Bond yield fell below 3.0 percent and has flattened the yield curve, causing a sell-off sentiment in Dow markets. FED policymakers have been giving hints on slowing down plan while exercising patience on rate hike, with hope to lift the stock markets on recovery.

 

Technical Forecast   USD/JPY traded lower last week as Dollar receded. Basically, the market has been moving from 112.30 – 113.80 range in sideways consolidation. This week, we forecast the trend will continue sideways trend but prone to fall after mid-week if Dollar weakens further. Lower target is identified at 111.00 in case of bear trend while topside resistance remains unchanged.

EUR/USD is narrowing into a flag formation on the day-chart. This week, we foresee the support will be very firm at 1.1300 level and the trend will probably drive up higher. First target is set at 1,1500 but possible to advance higher if Dollar recedes over the year-end season. Long position should be safeguarded with risk control in case of falling beneath 1.1300 level.

GBP/USD is currently standing 1.2700 support as the trend is coming to a cross path. Coming Wednesday (Asia hour), British Parliament will vote for the support of BREXIT deal that will implement in next April. Due to prior objection on majority basis, analysts project the disagreement to sign the pact may oust Prime Minister May or even case a collapse in British Government. Technically, we have identified the market range to move from 1.2700 – 1.2900 region and extension beyond this constriction will depend on the outcome of U.K. Parliament.

Gold prices have crossed above EMA200 line on day-chart and charts 5-month high above USD1245 /oz. This week, we reckon the trend might advance higher with support emerging at USD1235 /oz region. Technically, the bulls may reach USD1275 /oz area relatively to lower Dollar strength. However, this is based on the projection that aforementioned support is remaining intact throughout the whole week.

WTI Crude prices have been standing firm at USD50 /barrel recently. The affirmative decision of OPEC members in cutting oil production will add boosting power in the market trend in coming week. However, we foresee the range will be contained from USD50 – USD58 /barrel due to year-end season amid lower market participation. Observation on Dollar strength inversely to Crude prices is recommended as they will be closely correlated in early January.

Silver prices have begun to advance after the market formed a very strong base at USD14.00 – USD14.20 /oz region. Technically, we foresee the trend will be prone to drive higher but temporary resisted at USD15.00 /oz region. On hind side, the pierce above this resilient region sometime in January could lead to a very strong breakout since the XAU/XAG ratio is revealing a great potential of reversal at 85.00 level.  

Crude Palm Oil (FCPO) Futures on Bursa Derivatives traded in small range but prone to bearish force. Demand fell from regional countries as traders ware wary of stiffening trade war. February contract closed at RM1998 /MT and slipped below the RM2000 /MT benchmark. This week, we forecast the trend will reverse if the support at RM1950 /MT could hold the market well. A potential upside might reach RM2100 /MT if general commodity prices climb.

 

Disclaimer: This article is written for general information only. No liability by the writers, publisher or any third party involved in the distribution of this work.  

DAR Wong and Chong HC are the market strategists in APSRI on CPO markets. DAR has 29 years of trading and hedging experiences while HC trades for 11 years and now coaches institutional customers. They can be reached at www.pwforex.com


About the Author
DAR Wong (Singapore)
An international speaker with 27 years of trading experience in the global financial markets, DAR is a Market Master and author of “Living Daylight in Stock Market: Monetizing Your Profits in 8 Days”.

DAR Wong is an active market trader, registered fund manager, educator and author.He began his career in 1989 as an institutional Futures trader with Bank of America. DAR Wong specializes in trading global derivatives and financial markets. He has 26 years of experience accumulated through tenure with Bankers Trust, Barclays Bank, Citigroup (Smith Barney Shearson Inc) and as an independent trader.

DAR is the author of “8 Ways to Invest in China’s Emerging Market” and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional traders and active investors.

He is a popular and sought after international speaker who has presented to financial professionals and investors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China, Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East (UAE).

DAR is registered with NASD (now known as FINRA) series 3 and 5 as approved by National Futures Association (NFA) of USA and holds a current portfolio as Fund Strategist and Advisor with Dektos Investment registered with Monetary Authority of Singapore.

DAR is profiled as “One of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading “. In January 2015, DAR was honored with Outstanding Award for International Financial Market Analysis granted by ASEAN Commerce (Thailand).

DAR is the author of "8 Waysto Invest in China's Emerging Market" and contributes frequently to regional media, including financial TV/Radio programmes, newspapers and magazines for professional tradersand active investors.1

He is a popular and sought after international speaker who has presented to financialprofessionals and inverstors throughout the region including Singapore, Malaysia, Indonesia, Thailand, Hong Kong, China,Cambodia, Myanmar, Philippines, Sri Lanka, India, South Korea, Laos, Vietnam, United Kingdom and Middle East(UAE).2


Year
2003 - Set up ASPRI to provide hedging advisory for corporate clients and training for financial professionals
2009 - Released first book “8 Ways to Invest in China’s Emerging Market”
2010 - Profiled as “one of the most successful traders – Market Masters” in Brent Penfold’s bestselling book “The Universal Principles of Successful Trading” along with Larry Williams, Andrea Unger, Michael Cook, and Daryl Guppy etc
2011 - Received “Spirit of Enterprise”awarded by Singapore Management University in Singapore
2012 - Honored with Individual Diamond Career (Thailand) awardedby Royal Privy Council of Kingdom of Thailand
2013 - Appointed Vice Chairman of ASEAN-China Commerce Association and led a delegationtothe annual China-Asean Expo in Guangxi Province, China
2014 - Fund Manager cum Director in Dektos Investment Corporation registered with Monetary Authority of Singapore
2015 - Released new book “Living Daylight in Stock Market - Monetizing Your Profits in 8 Days” in January
2015 - Honored with Outstanding Award in International Financial Market Analysis awarded by ASEAN Commerce (Thailand)
2016 - Honored with Medal of Integrity by Royal Councilin Palace of Palembng, Indonesia

References

1.TV programs on ChannelNewsAsia (Singapore);Radio on 95.8 Capital (Singapore); Newspapers such as The Borneo Post (Malaysia), 资汇报 (Malaysia); Regional financial magazines such as The Analyst (India), 东盟商界(ASEAN, China), 资本杂志 (Malaysia).

2.Spoke at events for CME Group, Euronext LIFFE, Tokyo Commodity Exchange, Singapore Exchange, Korea Exchange, Bursa Malaysia, Thailand Futures Exchange, Jakarta Futures Exchange, Indonesia Commodity and Derivatives Exchange, Tokyo Commodity Exchange, Interactive Brokers, Xinhu Futures, Hangzhou Money Fair, China (Shenzhen) International Finance Expo, China (Guangzhou) International Finance Expo, Euromoney, CIMB, Maybank, RHB, UOB Bank, Asia Trader & Investor Convention, Global Rubber Conference, International Rubber Conference, Malaysia Rubber Board, International Rubber Research and Development Board,Malaysia Ministry of Agriculture, Rubber Industry Smallholders Development Authority, Vietnam Rubber Association, Cambodian Rubber Association, Bureau of Agriculture Research Philippines, Myanmar Rubber Planters & Producers Association etc.


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