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ROI-A $2,000 iPhone, double-digit oil and yen whiplash: Five charts of the financial week
Open Interest (ROI), every Friday, distills the financial week into five key charts that highlight the major trends and surprises, as well as the overlooked moves, that have characterized the last five days. 1. TRIPLE DIGIT COMEBACK RON BOUSSO is a columnist for ROI Energy. Benchmark Brent crude has risen 'above $100 a bar this week, after 'fresh titt-for-tat attack in the Middle East.?Including?the largest wave of strikes against oil tankers since the Iran War began more than six months back. This raises the multi-billion dollar question: How much oil is leaving the Strait of Hormuz actually? The market is dominated by uncertainty due to rising "dark crossings", indications that Iran may be losing control of the waterway, and conflicting estimations from the Trump administration. This will likely result in a geopolitical risk premium being baked into the energy price for many months. 2. INFLATION NATION JAMIE MCGEEVER, ROI Markets columnist: U.S. Inflation has been so high that it's easy to believe the Fed is referring to 3% as the new 2%. The University of Michigan Consumers' Inflation Expectations Survey shows that the Fed already does this: the five-year forecast has been above 3% in the survey for more than two years. The Fed could be forced to tighten monetary policy next week by a persistent inflation rate. Friday's consumer prices data for August will likely have a major impact on Kevin Warsh’s Fed's decision. 3. More to Come? MIKE DOLAN is a ROI Finance & Markets columnist. The European Central Bank raised its main interest rate on Thursday by a quarter-point to 2.50%, its second rate increase of the year. This brings the real or inflation adjusted policy rate into positive territory. European money markets still price in two rate increases over the next twelve months. ECB president Christine Lagarde refused to provide further guidance about what would happen next but said little to convince investors that the market pricing is correct. 4. YEN AND NOW JAMIE McGEEVER, ROI Markets columnist: "The yen rose to a seven month high against the U.S. Dollar this week. This was driven by expectations of faster Bank of Japan policy tightening, and increasing bets on Japanese investors repatriating overseas funds following another bout of intervention in late July. Foreign exchange traders and speculators are left with a burning issue after the Japanese currency's spectacular surge: Which currency should they use to fund their carry trades in? 5. FOLD THE?FOLD ANNA SZYMANSKI is the Editor-in Charge of ROI. John Ternus, Apple's new CEO, unveiled on Wednesday the $1,999 iPhone Duo, marking Apple's long-awaited entrance into the foldable phone market -- and setting a 'new ceiling' for iPhone pricing. Analysts anticipate strong demand despite the premium price, which could allow Apple to quickly gain ground in an industry dominated by Samsung Electronics and Huawei. The opinions expressed are solely those of their authors. These opinions do not represent the views of News. News is committed to the Trust Principles and to integrity, independence and freedom from bias.
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Saudi oil production has dropped to a record low following the Houthi attack, according to the IEA
The International Energy Agency said that Saudi Arabia's crude oil supply dropped by 2.3 million barrels per month to 6,000,000 bpd, its lowest level in over 30 years. Attacks on Saudi energy plants were cited as the reason. In a recent report, the IEA noted that groups affiliated with Yemen's Houthis had targeted ships passing through the Bab el-Mandeb and Saudi Arabia Jazan refinery, as well as shipping near Yanbu. Iran-backed militias used drones in Iraq to attack Saudi Arabia Abqaiq's oil processing site. Saudi Arabia's own assessment of its supply of 7.122?million bpd in August was lower than the IEA. Saudi Arabia informed the Organization of Petroleum Exporting Countries (OPEC) that it had supplied this amount last month. Saudi Arabia told OPEC that it produced 6.238 millions bpd last month, which is similar to the IEA estimate. The oil industry uses the term supply to describe the amount of oil that reaches the market. It includes the oil exported by a country, the oil loaded from storage and the oil used for domestic purposes in refineries and power stations. In its monthly 'oil market'report, the IEA revised its forecast of Saudi Arabian crude supply in 2026 by 885,000 bpd down to?7.6million bpd citing a?delayed recovery?for Middle East Gulf Production. The IEA reported that Saudi crude loadings from the Red Sea, and the so-called 'dark shipping transits', fell by 1.1 million bpd in the last month, to 3.5 millions bpd. Inventories also dropped by 400,000 bpd.
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Mapping the market: Be aware of the gap between US and Iranian oil as tensions escalate
Price of U.S. Oil has been on a scorching rise for the past?two months. On Thursday, it jumped nearly 7% as tensions between U.S. and Iran escalated. This sets up a showdown in 'the charts' to determine which direction it will go next. Click here to see a more detailed table. According to data provided by LSEG, the West Texas Intermediate price -- the benchmark crude oil for the United States -- has risen 53% since its July 2 low of $67.04. This jump has opened a four-month-old gap in the chart. The gap on the chart is the empty space between the closing price on May 19 of $107.77 and the opening price on May 20, which was $104,12. Technical analysts view gaps as a constraint on prices until they're filled. After that, the market can choose a different direction. The $111-$113 area is the next logical target after the gap zone, as it had been marked by price congestion during a series daily closes. If oil is able to fill the gap after the filling, then a decline below $102 or $100 would indicate that the direction of the market has changed. The next target, $93.50 (the high from July 23), would be the previous objective. The chart below shows: * WTI is up more than?53% from its July 2 low price of $67.04 The gap between May 19-20 is above $104 * Pushing the target higher to $111-$113, then reversing from the gap points towards $102, $100, and then $93.50
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Wall St. futures rebound as oil falls ahead of inflation test
U.S. stock index futures rebounded as oil prices dropped on Friday, and investors placed their hopes in the consumer inflation report. This helped end a tough week with a positive ending. Oracle's premarket price jumped by nearly 7% after it surpassed estimates for its quarterly results, announced late Thursday. This reassured investors that their AI investments are paying off. Nvidia gained 0.9%. The market is weakened by fluctuating interest rates expectations as stocks face a number of challenges, such as the intensifying Middle East conflict or the elevated Treasury yields. The market now faces the Consumer Price Index report, another data point that could shift rate expectations, following Thursday's slightly ?hotter-than-expected Producer Price Index reading that did little to reassure investors. Haidar Capital Management founder Said Haidar said, "We think the Federal Reserve must respond in the near term to avoid a repeating of the high inflation that occurred in the 1970s. This would be yet another failure for discretionary monetary policies." At 5:31 am. At 5:31 a.m. ET, Dow E Minis rose by 276 points or 0.53%. S&P 500 E-minis climbed by 40.75 or 0.54%. Nasdaq E-minis grew 166.75 or 0.57%. The blue-chip Dow Jones was heading for its steepest drop since March, and the S&P 500 benchmark was on course for its largest weekly loss since last June. Some investors wonder how far this year's rally will go. Jeff Schulze is the head investment strategist of Franklin Templeton Institute. He wrote that history shows that strong starts are likely to continue. According to Schulze, since?1950 the S&P 500 has risen more than 10% by the end of the month of August in 25 out of 28 instances. Brent crude futures fell more than 3%, but they were still over $104 per barrel. West Texas Intermediate crude futures fell?2.6%, but they were still close to $100 a barrel. Bill Adams, Fifth Third Commercial Bank's chief U.S. economic at the time, said: "The rise in energy prices since January has created a new risk of inflation." According to GasBuddy, the average national price of diesel in the U.S. on Thursday exceeded $6 per gallon for first time. Separately the yield on 10-year U.S. Treasury notes dropped 0.16?basis point but was still at its highest since 2023, 4.9424%. Stocks are less appealing when Treasuries have high yields. Adobe's premarket price dropped by more than 3% after its midpoint revenue forecast for the fourth quarter fell short of expectations. ACV Auctions shares soared by 44% following the agreement of online vehicle auctioneer Copart to purchase it for nearly $1.9 billion.
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Pakistan, the mediator in the conflict between Saudi Arabia and Iran-backed Houthis, is under pressure to pick a side.
Pakistan's dual role in the past year as Riyadh’s partner and Washington’s backchannel to Tehran has been evident. But this week, fighting between Yemen’s Iran-backed Houthi and Saudi forces will test how long Islamabad is able to hold both positions simultaneously. The fights are the first major test of the'mutual defence alliance' that was signed last month between Pakistan, Saudi Arabia and Turkey, and adds to an existing pact already in place between Islamabad & Riyadh. According to the agreement, any armed attack against one of the countries will be considered an attack against all three. Officials in Pakistan are concerned that the Houthi menace is more likely than earlier this year's Iranian missile attacks on Saudi energy infrastructure to drag Islamabad into war. Two Pakistani officials said in July that Pakistani soldiers were deployed near the Saudi border to Yemen, increasing their exposure. Pakistan has been working to improve its economy, which is still recovering from years of turmoil. Deals with Gulf countries have played a major role in this. Pakistan relies also on oil and natural gas shipments via the Strait of Hormuz, and through the Red Sea - routes that Iran and Houthis can disrupt. This gives Islamabad a reason to not alienate Tehran while it strengthens its ties with Gulf. WARNING TO IRAQ Tensions between Iran, a nuclear-armed country, and Pakistan have sometimes escalated to deadly clashes. In two years, Iran launched missiles and drones against alleged militant hideouts along the shared border with Pakistan in Balochistan Province. This sparked retaliatory strikes from Islamabad. This time, Pakistan wants to stop an escalation of violence before it is too late. Saudi, Pakistani, and Iranian sources said that the Saudis sent a warning to Iran this week urging it to rein in their Yemeni Houthi ally, according on Wednesday. On Thursday evening, Field Marshal Asim Muniz spoke with Abbas Araqchi, the Iranian Foreign Minister. They discussed "ways to restore diplomatic effort to de-escalate in all fronts", according to a Pakistani report. A second Pakistani official said that Pakistan is "trying to maintain a low-profile in the Saudi Houthi conflict" because Pakistan's stakes are very high. It does not wish to ruin relations with Iran. Sajjad Hajder Khan, spokesman for the Pakistani foreign ministry, said in a press briefing held on Thursday that no military response was being discussed to the Houthi attacks. In response to a comment request, Khan said that the Iranian leadership had always appreciated Pakistan's efforts at mediation. "Pakistan is a staunch opponent of escalation, and advocates restraint and dialogue." BALANCING ACT Officials from Iran have publicly praised Pakistan and stated that they don't see the defence pact in a negative light. Three Iranian sources who were familiar with the talks said that the private story was different. They explained that although Pakistan may have good intentions, they lack the resources to carry out the agreement or the negotiation experience of Qatari negotiators. The Iranian Foreign Ministry did not reply to a comment request. Islamabad appears to be recalibrating its efforts as it takes in the magnitude of the balance act it has undertaken. Kuwait, which was involved in the initial talks between Pakistan and Saudi Arabia, pushed for an agreement that was largely similar. Sources said that Pakistani officials were wary of establishing deeper military ties with a Gulf state which was exposed to Iranian bombardment. They therefore scaled back the talks. Last month, the two countries signed a more limited protocol covering border security, training and capacity building. This was far from what Kuwait had expected. On Thursday, foreign ministry spokesman Khan said there were no ?plans to expand the broader Pakistan-Saudi-Turkey alliance to new members at the moment. MEDIATOR OR COMBATANT: Farzana Shaikh is an associate fellow of Chatham House. She questioned if Tehran's faith in Islamabad has ever been as solid as presumed. She claimed that Pakistan did not possess the same level of expertise or wherewithal that Qatar and Oman could have provided, and that Islamabad’s increased role was due less to its diplomatic capital and more to "the friendship" between Donald Trump and Pakistani field marshal Asim Munir. Trump has repeatedly called Munir "his favorite field marshal", following a 'charm offensive' by Pakistan centered around crypto deals and American access to rare mineral deposits, as well as counterterrorism. Some argue that the role of Islamabad as a?mediator may not be affected by this. Kamran Bokhari is a Washington-based analyst of Pakistan-Iran Relations. He said that Tehran engages Islamabad because it aligns itself with Riyadh, and Washington. He said that Islamabad’s alignment allows it to deliver messages in a way a neutral party cannot. This is the exact value Riyadh, and Washington, are counting on, when they route their messages through?Islamabad. An escalation of fighting between Saudi Arabia and the Houthis could change this calculus. Bokhari said, "Relaying and shaping a message is one thing, but active air-defense support or intelligence?support are another. This is what turns Pakistan from a stakeholder to a combatant." Pakistan has the seventh largest military in the entire world, measured by the number of active military personnel. It had already sent thousands of soldiers, as well as a squadron fighter jets, to Saudi Arabia, under an earlier defence agreement. Islamabad, which has troops deployed on Pakistan's border with India as well as fighting insurgencies across the western provinces of Pakistan and along its tense border to India, is now trying temper demands from other Gulf States eager for similar assurances. Bokhari stated that the Pakistani forces were stretched, and any additional commitments would be "daunting".
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Nearly one third of India’s coal-fired power plants are running on low fuel supplies.
Government data revealed that despite efforts by the government to increase fuel supplies, nearly a third (33%) of India's coal-fired plants operate with "critically low" fuel stock levels. This is because an extended period of hot weather has kept electricity demand high. India's peak electricity demand, which is a measure for the maximum amount of electricity required, hovers around the record 270.70 Gigawatts reached in May. The demand for electricity has been around 267 GW in the last few days, driven by an El Nino weather pattern and increased cooling requirements. Central Electricity Authority data showed that the number of power plants with coal inventories below 25% or only capable of producing power for three days, rose sharply from 45 to 59 on September 9, up from 45 at the end of August. Manoj Kumar is an analyst with the Centre for Research on Energy and Clean Air. Analysts said that while clean energy, mostly solar power, is meeting most of the electricity needs during the day, inadequate battery storage and lower levels of water reservoirs are placing pressure on coal-fired generators. Kumar said that India needs to increase coal supplies to utilities via the rail network in the near term to maintain normal levels of stock. India deployed 444?or rakes? on September 6, up from 370 the previous day, to increase coal?supplies? to power plants. Coal India, and its subsidiaries, have also increased coal shipment by road. Coal India, world's largest coal miner, has said that it holds adequate stocks at its pitheads of 76 million tons.
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IEA warns that the oil gap in 2026 will increase due to the delayed return of normal Gulf flow
The International Energy Agency announced on Friday that global oil demand and supply will be lower than originally thought. This is because the Iran War has not been resolved, and the return to 'normal Middle East flows' until 2027 is delayed. Fuel prices are also expected to rise as a result. Crude prices have reached $110 per barrel for the first week since May due to an increase in attacks on oil tankers along Middle East shipping routes. This increase is overshadowed, however, by the record-breaking price of diesel. The IEA has now predicted that the world's oil supply will decline by 5.7 millions barrels per day in?2026, which is an increase from a previous drop of around 4%. The world's oil supplies are short and inventories are being used at an unprecedented rate. The IEA reported that global stocks dropped by 3.1 mbpd during August. In a report published every month, the IEA - which advises industrialised nations - stated that "Inventories played a critical role in balancing markets to date." "With buffers'shrinking' and the 'global refining systems stretched to the limits, the need to resolve the conflict in the Middle East - and the Russia/Ukraine War, now in its fifth year – is greater than ever in order to avoid further tightening of the market." The demand is also lower than expected due in part to the record fuel prices. The IEA predicted that world oil demand 'will fall by 2.5 million bpd in this year. This is more than their previous estimate of a 1.6million bpd drop.
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Sources say Asian refiners are seeking a Brent price swap in Saudi crude term negotiations
Two Asian refiners, according to sources familiar with the matter, have asked Saudi Aramco to switch the benchmark for their long-term crude contracts from Dubai to ICE Brent. Middle Eastern price indicators have surged over Brent since August, due to the increasing tensions between Iran and the United States. The APPEC Conference in Singapore is an annual gathering of Middle Eastern producers and Asian refining companies to discuss long-term contracts. These are usually finalised by the end of the year. Sources said that refiners requested supplies for 2027 during this week's discussions. They cited the increased volatility of the Middle East benchmark, as the amount of tradeable oil has decreased since a number of grades were removed from the Strait of Hormuz at the start of the Iran War. One of the producers said that other Middle Eastern producers have also received the same request to change benchmarks. Saudi?Aramco refused to comment. Saudi Arabia, which is the largest oil exporter in the world, releases monthly official selling price (OSP) differentials from the average of Platts Oman and GME Dubai quotes for crude sold on a term basis. Aramco's and other producers' reactions to renewed requests for a "change in benchmarks" were unclear. The disruptions in shipping and the uncertainty caused by conflicts in the Middle East also clouded future prospects for supply. This raises questions about how much crude oil producers are able to deliver. Platts 'Dubai and Oman Futures' traded on the Gulf Mercantile Exchange on Thursday stood at $119.40 a barrel and $119.30 a barrel, respectively. This was a multi-month high level. Brent crude futures closed at $101.75 at Asia’s market close. Cash premiums on Dubai and Oman crude have also reached multi-month highs, at $26,91 and $26,81 per barrel, respectively, reflecting the acute shortages in the physical market. Dubai and Oman benchmarks have experienced similar volatility in the past. Cash-market premiums soared in March after aggressive bidding from major trading houses pushed benchmark-linked prices higher.
Meloni's steelworks shut down by Italian court
A legal source reported that an Italian court upheld a Friday order to close?down the blast furnaces at former Ilva Works, in a blow against Prime Minister Giorgia Meloni’s efforts to keep the country's biggest?steel factory operating?while the buyer is sought.
The plant is a major employer in the southern Italian town of Taranto and is widely considered to be strategically important to Italy's manufacturing industry, as it supplies steel to industries from construction to automobile production.
The Milan Court of Appeal has rejected a request by Acciaierie d'Italia to appeal a previous decision?ordering that the hot-end be closed and remediated because there were inadequate environmental safeguards in place to 'protect residents from pollution'.
The ruling casts doubt on the future of this sprawling plant that has been the subject of many disputes over public health, environmental damage, industrial policy, and employment.
It is the only integrated steelworks in Italy that produces steel using iron ore and coke through a blast furnace process.
Acciaierie d'Italia argues that closing the hot-end facility risks compromising steel?production on the site. They warn that after a certain limit, blast furnace cooling procedures may make it impossible to restart operations without extensive repairs.
The government, which is looking for investors to buy a company that is currently under extraordinary administration, is being pressed by increasing pressures to find a new industrial solution, less than a calendar year before the national elections.
Alfredo Mantovano told unions in a statement this week that the government had not ruled out retaining a stake in the company.
Mantovano stated that Italy's steel sector needs to have a?green future based on electric arc furnaces powered by DRI.
(source: Reuters)