Welcome to CrushTheStreet.com’s Weekly Market Wrap-Up!
I’m Joshua Enomoto, taking over hosting duties for this week. How long will gas prices stay deflated? That’s the main question drivers across America are asking as the light crude oil price recently dipped below the 80-dollar level on an intraday basis, the first time this psychological support line has been breached since the summer of 2012. The main internationally recognized benchmark for oil prices, Brent crude, also suffered severely in the spot-market, moving from a rough-average of $110-dollars per barrel in the first half of this year down to around $86 dollars in the middle of October, a loss of more than 21-percent of valuation.
The reasons cited for the decline are varied, although the most obvious center on a lack of demand. It’s no secret that international financial markets have been riding a wave of artificial speculation, with recent volatility in U.S. and Asian equity sectors a reflection of the harsh reality that the Eurozone has to overcome to justify their previous lofty valuations. As common rationale explains, the less confident an economy, the less likely it will be to acquire goods or services.
While most mainstream media outlets have stayed true to this evidentiary pathway, Matt Clinch of CNBC took an unexpected, if not outright conspiratorial turn by writing an article suggesting that the U.S government may be calling the shots behind the scenes with regards to the volatile crude oil market. In his commentary, Mr. Clinch features Patrick Legland, Global Head of Research at SG Corporate & Investment Banking, who described the sudden bearish shift in oil prices and the international sanctions levied on Russia as an “interesting coincidence.”
Certainly, the conditions are ripe for a sophisticated cointelpro operation, with the International Monetary Fund halving its growth forecast for Russia in 2015 and Moody’s downgrading the commoditized country’s sovereign debt, citing depressed oil prices and restricted access to Western debt markets. However, very few respected analysts have carried such theories further, with a majority noting the potentiality of government manipulation of commodity markets to leverage geopolitical interests but stopping well-short of accusation. Even famed financial expert and author Jim Rickards, senior managing director at Tangent Capital and YouTube celebrity amongst alternative-minded investors, conceded that while government manipulation was “plausible,” he had no hard evidence to pursue the matter with any weight. Ultimately, the real causation factor may lie somewhere in the middle: prices may be adjusted downwards not by outright manipulation but by “over-speculation” towards actual domestic production figures, combined with monetary policies that are incongruent with our economic infrastructure.
Both domestic and international equity markets experienced a robust rally on the back of upbeat corporate earnings from American blue-chip names, driving the Dow Jones up more than 200 points to close at 16,678, while the S&P 500 gained nearly one-and-a-quarter percent, finishing the session at 1950. The precious metals complex had a mixed performance, with gold dropping nearly three-fourths of a percent, while silver remained range-bound at 17.30. Palladium, on the other hand, shot up nearly two-percent as both violence and rhetoric were ratcheted up over the Ukraine crisis. Finally, bitcoin had a series of slow performances this week, rarely moving beyond a tight range at 380. At last check, some near-term volatility dropped the valuation by twenty dollars.
And that will do it for this edition. Thanks for watching and we’ll see you next week!