Hello, today in the morning what 's next on crude oil after OPEC + this is the theme of this post. Of course, at the very beginning, I encourage you to subscribe, add comments, add likes. If you think that these materials have some value for you, and all those who want to follow my portfolio in the October edition, I encourage you to send a special message. Email address below you will receive a message with information as I modify my wallet.
Depending on the changing market situation on indices and forex, commodities, bonds and even Bitcoin. I invite you, I encourage you. Let's start! But at the very beginning I would like to inform you that all the charts that have been downloaded to create this entry come from two xStation 5 platforms and from Bloomberg. What's next for OPEC + crude oil? Yesterday a very interesting event was the OPEC + decision about the production of crude oil from November. And it turned out that OPEC + cut crude oil production by 2 million barrels a day. This is the biggest cut since 2020, and it's very interesting what's going on.
OPEC + says that it wants to raise the price of crude oil and this, of course, runs counter to what Western Europe aims to reduce inflation through the factor that is crude oil, which affects the prices of fuels and various other products later . So this is a very interesting, another puzzle in the international geopolitical game that OPEC + does not want to cut the price of oil so low as to bring inflation relief in Western European countries. Is it a good move and what will its consequences and repercussions be? We'll talk about it in a moment. However, as we can see, the short-term consequences of this on the oil market are not special, big.
Crude oil is under the influence of greater volatility, yesterday's session was up, but somehow this morning there is no continuation of the upward trend and I think that in such a situation it is worth remembering. Yesterday's session, however, led to the break of the three-month downtrend line and perhaps oil will test soon and approach the neckline of the double peak formation, which is around $ 93. This is what it looks like from the technical analysis that signals to us just this behavior and some kind of backward movement.
If the demand for risk in the global perspective continues its movement, On the other hand, if we look at the weekly chart, we can see that the shape of the weekly candlestick starts to show a rebound very nicely from its very long-term average. And in such a situation, apart from a move back to the neckline of the double peak formation, we will probably also see a move back to the neckline of the two-year history, which was broken at the beginning of September and it will soon be seen whether we are really dealing only with the short-term some such growth impulse, is this a harbinger of something long term with some greater growth impulse? In my opinion, the biggest, biggest lesson to be learned from yesterday's event is that OPEC + does not want to let Western Europe's inflation fall and we will see if this really is some element of the international game between Russia and all those who verify the international order, and Western Europe and, above all, the United States.
And as a foreign market, another, that is, those who do some kind of hedging, long-term speculation, as they see here, it could happen in crude oil over the next year. And what do we see here? That regardless of the expiry date of the derivative, the demand for put options prevails, i.e. options that allow you to speculate on declines or hedge against declines. However, there is one more curiosity, because here the volatility shows that it has its extremes more or less at the turn of this year and next year, i.e.
As if the market had at its disposal here, that the fourth quarter will be very volatile for the crude oil market, that there will be a lot of movement, a lot volatility, there will be a great amplitude of fluctuations and possibly a downward trend. This is what it looks like from what we see in this chart, so I am very, very curious to see if this will come true, will these crude oil readings be correct? And I emphasize once again the option smiles usually show the strength and prices of the put option, i.e. that. There is a greater demand for options that allow to speculate on declines or to hedge against drops in crude oil. And another interesting graph is the correlation correlation between the behavior of crude oil and the most important other financial instruments. I found the most extreme ones. It turns out the most extreme. It is now positive against the Australian currency, Australia. Against the dollar, this currency pair is + 0.653, and it looks like this represents a historic behavior that showed that if crude oil was more expensive then Australia was probably also.
Against the dollar, this pair will continue its upward trend. Conversely, if the Australia pair against the dollar continues its downward trend, crude oil will fall. This is what this correlation shows. First and foremost, it is the correlation between Australia's performance across its index and, of course, the impact of the US dollar. As we know, when the US dollar appreciates, it's not a good time to enter the commodity market. And this graph clearly shows it. This is the chart from 2016. What is the extreme negative correlation? Of course also for the currency pair. The dollar to Canada is -0.69. It is also very close to historical lows, which means that if the crude oil begins to rise, there is pressure to buy the Canadian currency. Conversely, if the oil falls in this case, then there is also pressure to sell Canadian currency.
So there is a reason why currencies such as Australia, New Zealand and Canada are called commodity currencies, and additionally, the Norwegian krone and the South African rand should be taken into account. These currencies make up the so-called a collection of commodity currencies, and we can see that the correlation link between these hands is very, very significant and strong. And, of course, this chart that shows how inflation in the United States behaves in relation to the behavior of oil. That is why I very often say that crude oil is an indicator ahead of inflationary processes. If the crude oil falls in this case, then there is pressure for inflation to go down as well, and this link is extremely strong this year, it is practically one-to-one.
And, of course, crude oil grew yesterday because of this cut in oil production. This is, of course, like a blow to the Americans. OPEC + works against crude oil being as low as possible , because we remember that in a month's time there are elections in the United States and the US authorities want the price of a barrel the price of gasoline gallons at gas stations at that time to be as low as possible. And this decision, which was made yesterday, does not help the decision that the prices of gasoline at gas stations in early November are in the United States.
What's next? I'm very curious. However, it is evident that the monthly average for crude oil at the end of this month was lower than at the end of August, so it is likely that the US CPI will also decline. It will be at lower levels than we have seen in recent months. Perhaps it will be the lowest inflation level since the beginning of the war in Ukraine, so crude oil is behaving very interestingly.
We will see technically how it will behave, whether there will be a return move and whether the options market is right, which says that no matter what the expiry date of a derivative, investors with very large capital favor the PUT option, i.e. options to declines in the raw materials market. Let's also look at the performance of copper, which is testing the fastest downtrend that was previously confirmed, so the market will have to really make a pick soon. Either it stabs it or it moves down again. We have a downward rebound.
This is very strictly going to be. This is likely to be very closely related to the global risk demand behavior, so we expect very, very intensively what will happen on the risk demand. And if we are, of course, in the international markets, we are primarily looking at the behavior of US bonds. And yesterday profitability slightly increased. We even got closer to the level of 3.80, but. As we will see later on the stock indices.
Maybe this case of this behavior will not matter much due to the fact that the market is now alive with what will happen tomorrow, and tomorrow we will witness data on the labor market from the United States, which are of great importance for assessing the Fed's decision on interest rates and of course the general condition of the economy. And only after this decision, the market will remember what the levels of US bonds are. However, it is worth noting that these profitability are rising again. German bonds behaved very similarly , also yield returned to the level of 2.
Theoretically, this should be negative for the stock indices, but now they live on data from the labor market. And today we will get to know the weekly labor market report and if it does not continue the upward trend, it will of course be positively perceived for risk. On the other hand, it is also worth looking at the behavior of the Swiss franc in relation to the current behavior of Italian papers in yields, because if it turns out that the yield between the Swiss franc and the behavior of bond yields is positive, there is a positive correlation. The conclusion is that the Swiss franc is being used as a currency to bring us safe haven security, so let's be very vigilant, because the correlation has become very beneficial in this case for those who say that we will witness some perturbations soon on Italian papers, and this, in my opinion, is of great importance.
If we are dealing with the interest rate market, historical data show that the decline in the VIX index, i.e. the fear index, as it is said on the stock exchange indices, culminates above the level of 40. In a situation where we are dealing with some crises, very strong collapses and the peak of the recession, or a strong wave of sell-off. At the moment, this indicator is far from this level of 40 and it very often coincides with interest rate cuts in the United States, so if this VIX indicators break above the level of 40, we should also expect that the Fed will start talking about an interest rate cut.
. I am curious if that will actually happen. And now the risk market. Yesterday's session brought a positive ending in my opinion, despite the fact that we had rather neutral levels compared to those observed the day before. And this, in my opinion, is signaled by the anticipation of what will appear tomorrow, ie what the labor market data will be. Japan stock indices are rising. We are breaking out and the market signals that risk demand is eager to attack this morning.
Perhaps stock indices in Europe will try to move up, but in my opinion they will be calmly waiting for what will happen tomorrow, ie for data from the labor market at 14:30. If we look at Bitcoin, it is very close to breaking above the neckline of a few weeks of formation, reversing the downward trend into an upward trend, and perhaps we will soon also attack the downward trend annually, which is in the region of 21,000. dollars. However, in my opinion, the most important message of Bitcoin is that it supports the demand for risk visible on stock indices. If we are in the risk market, the US dollar is also very interesting for us. Manages to go back to the 0.99 level.
This is good news. Demand for risk should attack, so expect a further move up, at least trying to attack parity. But of course the fate of this level will be decided. The data from the labor market that we will get to know tomorrow will also decide. In the currency market, we see stabilization in pairs related to one. I already said one success. So far that we are dealing with.
We have dealt with the intervention of the Bank of Japan, is that very much volatility is dying out. However, for the time being the Japanese yen has not appreciated against the US dollar, which in my opinion was one of the goals of this intervention in the foreign exchange market. Let's also look at the British pound, which is trying to get back above 0.85. However, this level is important due to the fact that these are levels like the neckline of the formation, reversing and a downward trend on the rising symmetry axis, also of the price horizon. So any stay above 0.80 7 favors the British pound selling and any decline below 0.80 7. It is true that the odds of the British pound strengthening are increasing, so we are exactly at that level so the market will have to also decide which way to go.
However, the proximity to this level means that the British pound market is close to the noise levels and now it's time for Polish assets. Yesterday the MPC made a decision on the one hundred percent statement after the decision, and today at 3pm we have a press conference of President Lipiński, which is also of great importance. In the first place, the market practically did not care that there was no MPC decision to raise interest rates. The market expected a 25-point hike in interest rates, but did not get it.
However, yesterday we observed a duplication of the behavior of Polish bonds in relation to the American or German papers, and the zloty joined the weakening tendency of the domestic currency in a situation when the euro was trying to fall significantly below the 0.99 level. As we can see, the return to the 099 level also puts pressure on the strengthening of the domestic currency. The conclusion is that the words of the president Glapiński, MPC decisions, some other events have practically no significance for the domestic currency market.
The only thing that matters is the global capital flow related to the movement on the euro, dollar, i.e. the American dollar. If, after tomorrow, after tomorrow's information and data from the labor market, the US dollar starts to weaken further, the zloty will strengthen. And if the US dollar grows tomorrow after the MPC decision, after the PO's decision, the labor market data will strengthen, the zloty will start to weaken again. And that's the correlation. This is the main factor that causes movements in the zloty or euro zloty or zloty market right now, and the local specificity of the dollar zloty shows us that it has been confirmed. And the dollar or the fastest uptrend line, i.e. the level around 4.50, is growing in importance as a reference point.
And yesterday, the Stock Exchange, which tried to discount the declines in the US stock indices , also gave us a rebound from the downward trend line. But the Warsaw Stock Exchange was caught with the Wall Street stock index creating its intraday lows. We stayed here at the end of the day anyway, so I expect a rebound today. And again trying to attack this downtrend while waiting for what will happen tomorrow. Since I do not expect today the words of President Glapiński to somehow lead to a movement on the Polish stock exchange, because the Warsaw Stock Exchange is also influenced by what is happening on global financial flows, so the US dollar will also influence what will happen here on the Warsaw Stock Exchange. There are no domestic factors that are virtually irrelevant. For over 10 years, Polish politics and local events have had no meaning or impact on the valuation of Polish assets on the Warsaw Stock Exchange. We will also see. It promises to be a very interesting session at 3 p.m.
for Poland's domestic assets, and for us? For Europe and the world. It looks like we will be awaiting what the US labor market data will be tomorrow. Thank you for listening to this material. I encourage you to subscribe, add comments, give likes. If you think that these materials are of some value to you. And all those who want to follow my portfolio in the October edition, feel free to send a special e-mail address below, and you will receive information about how I modify my portfolio depending on the changing market situation. The next day, stock indices, forex, commodities, bonds, and even Bitcoin. I invite you, I encourage you, I wish you a rate of return and have a nice day. Regards..