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Oil markets ignore Chinese reserves release

Oil futures have risen yet again on Friday to cap off a rather strong run over the last month. This is despite the fact that the Chinese are set to release crude reserves around the lunar new year. Part of the rise in prices in the crude oil market as of late is that OPEC+ is nowhere near pumping its overall quota, thereby narrowing the cushion that traders thought there would be as far as supply is concerned. Because of this, it is very likely that what we will see continued buying, because the Chinese reserve release is a known factor.

 

Further fueling the idea of crude oil going higher, has been a shrinking US dollar, which typically helps most commodities. Beyond that, Omicron has turned out to be less deadly than people had been concerned about, and therefore it is not a huge surprise to see crude oil picked back up as economies are set to reopen. Crude oil is a reflection of the strength of the global economy, so therefore it is not a huge surprise to see crude oil picking up as most traders expect economies to get back to normal within the next year.

Retail sales show bigger drop than anticipated in America

Retail sales show bigger drop than anticipated in America

US retail sales have come in much more than anticipated as sales have slowed the most in 10 months, due to concerns about inflation and the Omicron virus. This is the fastest jump in inflation in decades the United States has seen, with the last time we saw inflation like this during the early years of the Reagan presidency. With this being the case, there are concerns that the millennials and Gen-Zs will have a hard time adapting as wages have not kept up.

 

The value of overall purchases decreased 1.9% after a revised 0.2% gain a month earlier, Commerce Department figures showed on Friday. The figures are not adjusted for inflation, and this suggests that price adjusted receipts were even weaker than the headline number. The median estimate of economists suggested a 0.1% drop in retail sales from the previous month, showing just how huge of a miss this was. The sliding retail purchases that the end of the year suggest that we could have a very tepid first quarter as well, as the holiday season is traditionally a very solid month for retail sales.

US manufacturing output drops in December

US manufacturing output drops in December

The production at US factories has unexpectedly fallen during the month of December, pulled down quite drastically by a decline in output at motor vehicle plants, due to the ongoing problems with semiconductor shortages. Manufacturing output has dropped 0.3% for the month of December, after it increased 0.6% during the month of November the Federal Reserve has stated on Friday. Most economists had anticipated that factory production was going to rise 0.5% during the month of December, showing a big miss. However, output has increased 3.5% compared to December 2020. Manufacturing has increase production at an annualized rate of 4.9% for Q4, suggesting that this may be a bit of an anomaly.

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