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A Plethora Of Bearish Factors Push Oil Prices Down

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On Thursday, US benchmark West Texas Intermediate crude oil prices experienced a 2% decline, reaching a one-week low. The drop then continued on Friday morning. This drop can be attributed to several interconnected factors that impact supply and demand including inflation, Federal Reserve policy, the US debt ceiling, OPEC+ projections, and inventories.

US Debt Ceiling Standoff Raises Concerns of a Potential Recession

One significant factor contributing to the decline in oil prices is the political standoff over the US debt ceiling. This standoff has raised concerns about a potential recession in the world’s largest oil consumer, as it creates uncertainties and dampens investor sentiment. Furthermore, rising US jobless claims and weak Chinese economic data have added to market anxieties, resulting in the lowest closing prices for the benchmark since May 4.

Strong US Dollar and Uncertainties Pose Obstacles for Oil Markets

The strong US Dollar is another factor affecting crude oil prices. A stronger dollar makes oil more expensive in other countries, reducing demand and putting downward pressure on prices. Moreover, uncertainties related to recent banking issues that could lead to a credit crunch across the oil industry, and the persistent possibility of a recession pose significant obstacles for the oil markets.

Federal Reserve’s Pause on Interest Rate Hikes Impacts Oil Demand

The strengthening dollar data has supported the case for the Federal…

On Thursday, US benchmark West Texas Intermediate crude oil prices experienced a 2% decline, reaching a one-week low. The drop then continued on Friday morning. This drop can be attributed to several interconnected factors that impact supply and demand including inflation, Federal Reserve policy, the US debt ceiling, OPEC+ projections, and inventories.

US Debt Ceiling Standoff Raises Concerns of a Potential Recession

One significant factor contributing to the decline in oil prices is the political standoff over the US debt ceiling. This standoff has raised concerns about a potential recession in the world’s largest oil consumer, as it creates uncertainties and dampens investor sentiment. Furthermore, rising US jobless claims and weak Chinese economic data have added to market anxieties, resulting in the lowest closing prices for the benchmark since May 4.

Strong US Dollar and Uncertainties Pose Obstacles for Oil Markets

The strong US Dollar is another factor affecting crude oil prices. A stronger dollar makes oil more expensive in other countries, reducing demand and putting downward pressure on prices. Moreover, uncertainties related to recent banking issues that could lead to a credit crunch across the oil industry, and the persistent possibility of a recession pose significant obstacles for the oil markets.

Federal Reserve’s Pause on Interest Rate Hikes Impacts Oil Demand

The strengthening dollar data has supported the case for the Federal Reserve to pause interest rate hikes. However, it has not generated expectations of year-end rate cuts. Higher interest rates can weigh on oil demand by increasing borrowing costs and exerting pressure on economic growth. It is important to note that an extended period of high interest rates could place additional stress on banks, as stated by Minneapolis Federal Reserve President Neel Kashkari. This delicate balance between interest rates, inflation, and economic factors plays a crucial role in shaping oil prices.

Oil Market Disregards OPEC+ Projections Amid Economic Risks            

On the demand side, the oil market has largely disregarded OPEC+ projections for 2023. OPEC+ projected an increase in oil demand in China, the world’s largest oil importer. However, the market remains cautious due to potential economic risks, including the US debt ceiling battle. Economic uncertainties can impact oil demand and lead to fluctuations in prices.

Iraq’s Request for Oil Exports Adds Supply Dynamics to the Market

Turning to the supply side, Iraq has officially requested Turkey to resume oil exports through a pipeline running from the semi-autonomous Kurdistan Region to the Turkish port of Ceyhan. If approved, this could contribute an additional 450,000 barrels per day (bpd) to global crude flows. Changes in supply levels have a direct impact on oil prices, as they affect the overall market dynamics and balance between supply and demand.

Fluctuations in Inventories Impact Crude Oil Prices

In terms of inventories, fluctuations in crude oil stocks can influence prices. An unexpected build in US crude oil inventories, along with lower crude imports and softer export growth in China, has affected prices in recent sessions. On the other hand, the decline in US gasoline inventories and the rise in jet fuel demand ahead of the summer driving season have somewhat limited the decline in crude oil prices.

Analysts Forecast Range for Oil Prices in 2023

Looking ahead, some analysts forecast oil prices to range from $75 to $95 during 2023, considering fundamental supply and demand dynamics. The anticipation of a rally as the summer driving season approaches reflects expectations of increased demand for transportation fuels.

Investor Sentiment Tied to US Debt Ceiling Talks

Investors are closely monitoring talks on raising the US government’s debt ceiling, as it has implications for the overall economic stability. Concerns about a potential default have led to apprehension on Wall Street, affecting investor sentiment. However, once a compromise is reached, analysts believe that investors will be encouraged to act, leading to a rally in stocks and providing support for oil prices. Additionally, inflation data showing a slight easing could provide cover for the Federal Reserve to pause further interest rate increases, which can have an impact on oil demand.

Weekly Technical Analysis

Weekly June WTI Crude Oil

WTI

Trend Indicator Analysis             

The main trend is down according to the weekly swing chart. It turned down last week when sellers took out the previous main bottom at $64.58.

A trade through $63.64 will extend the downtrend. A move through $83.38 will change the main trend to up.

Retracement Level Analysis

The contract range is $37.04 to $100.48. Its retracement zone at $68.76 to $61.27 is the major support. The market tested this area last week and held its ground at $63.64, with enough buying coming in to reestablish the zone as support.

The minor range is $83.38 to $63.64. Its retracement zone at $73.51 to $75.84 is resistance. It stopped the rally this week at $73.89. The market would have to overcome this zone to get excited about the upside.

Weekly Technical Forecast

The direction of the June WTI crude oil market the week-ending May 19 is likely to be determined by trader reaction to the minor 50% level at $73.51.

Bullish Scenario

A sustained move over $73.51 will signal the presence of buyers. This could lead to a quick test of the minor Fibonacci level at $75.84. Overcoming this level could trigger an acceleration to the upside with the resistance cluster at $82.06 – $83.38 the next target.

Bearish Scenario

A sustained move under $73.51 will signal the presence of sellers. This could lead to a retest of the major 50% level at $68.76. This level has to hold or prices could collapse into the support cluster at $63.64 – $61.27.

Short-Term Outlook:  Cautious Amid Debt Ceiling Worries

Taking into consideration all the factors driving the price action at this time, one has to conclude that the short-term forecast for oil prices suggests a mixed outlook. The decline in crude oil prices, driven by the US debt ceiling standoff, weak economic data, and a strong US Dollar, has created uncertainties and dampened investor sentiment. However, the anticipation of a compromise being reached on the debt ceiling and a slight easing in inflation data could provide support for oil prices.

In terms of supply dynamics, the potential addition of 450,000 barrels per day through Iraq’s request to resume oil exports could impact the overall market balance. Fluctuations in inventories, with unexpected builds in US crude oil stocks but declining gasoline inventories, also contribute to the complex price dynamics.

Looking ahead, analysts forecast a range for oil prices in 2023 between $75 and $95, taking into account fundamental supply and demand dynamics. This forecast considers the anticipation of increased demand for transportation fuels during the upcoming summer driving season.

Investor sentiment remains tied to the ongoing US debt ceiling talks, as a compromise and resolution could encourage market participants and potentially lead to a rally in stocks, providing support for oil prices.

It’s important to note that the oil market has disregarded OPEC+ projections for increased oil demand in China, given the prevailing economic risks, including the US debt ceiling battle.

Overall, the short-term forecast for oil prices suggests a cautious outlook, with various factors contributing to price fluctuations. Monitoring developments in the US debt ceiling discussions, inflation data, supply dynamics, and investor sentiment will be crucial in understanding the future trajectory of oil prices.

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Half of Ontarians support union’s goals in ongoing LCBO strike: poll

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Fewer than one-third of Ontarians say they want the provincial government to intervene to end the 12-day strike at Ontario’s main liquor retailer, while about half are supportive of the striking union’s demands.

That’s according to a new Leger poll that asked if the government should use binding arbitration or legislation to ensure LCBO stores open as soon as possible.

Twenty-nine per cent of respondents supported such a move, while 44 per cent opposed it. The poll also asked if respondents support the union’s stated goals, including wage increases and more permanent positions. Just under half, 49 per cent, answered in the affirmative, while 25 per cent said they were not supportive.

Awareness of the strike in Ontario is high, according to the poll, with 89 per cent saying they knew about it, though only 15 per cent reported being personally affected. The Leger poll of 601 residents, conducted last weekend, can’t be assigned a margin of error because online surveys are not considered truly random samples.

Approximately 10,000 workers at the LCBO walked off the job on July 5 after negotiations broke down.

The union representing the workers said the sides were headed back to the bargaining table Wednesday.

The Ontario Public Service Employees Union has said the main issue is the province’s alcohol expansion plans that would see ready-to-drink cocktails sold outside LCBO stores — a move it maintains poses an existential threat to the LCBO and could lead to major job losses.

Colleen MacLeod, chair of the union’s LCBO bargaining unit, has said the plan would “mean thousands of lost jobs, fewer hours for the 70 per cent of LCBO retail workers who are casual and struggling to make ends meet, and hundreds of millions in dollars of lost public revenues drained from health care, education and infrastructure.”

The LCBO, a Crown corporation, nets the province $2.5 billion a year.

On Monday, the Ontario government sped up its expansion plan. The 450 stores across Ontario already licensed to sell beer, wine and ciders will be able to start ordering coolers and seltzers on Thursday and sell them as soon as they arrive.

The province has said it does not want to privatize the LCBO, and that the expansion is about giving people more choice and more convenience to buy alcohol.

Stephanie Ross, an associate professor in the school of labour studies at McMaster University, said Premier Doug Ford doesn’t have a great reputation when it comes to labour, given the high-profile disputes in recent years with health-care and education workers. And he’s faced accusations of making policy moves that benefit friends in the private sector, a criticism that’s been levied against him in the LCBO dispute.

“There is a base of support for the union’s message here, both in terms of the working conditions that they’re trying to fight to improve, and in terms of the role that the LCBO plays in funding public services in the province,” she said.

But the public may not be as sympathetic to LCBO workers as it has been to some others, like in the Metro grocery workers’ strike last year, she said — a relatively straightforward fight by low-paid workers struggling to afford food against the industry being partially blamed for food prices.

“And so in the depths of a kind of historic cost-of-living crisis, I think it was easier to feel sympathy for such workers in terms of really having to fight to make up lost ground.”

That means the LCBO union has its work cut out to try and convince the public of its cause, said Ross, especially when consumers are already divided on the liquor privatization issue in the first place. She thinks the union is doing a good job, however, of arguing the case for the LCBO as a public asset that helps fund important public services.

Larry Savage, a professor in the labour studies department at Brock University, said it’s clear both the union and the Ford government “are working hard to win over the public to their respective positions.”

The union has a “potentially powerful strategy” to gain public support, but it’s not a surefire one, he said in an email.

This strategy “requires people to connect the dots between the privatization of the LCBO and the loss of a critical revenue stream that contributes billions to public services like health care and education.”

Meanwhile, the government’s strategy has been to try and leverage consumer frustration over the strike in order to drive more support for increased privatization, said Savage.

“It’s a high-risk strategy because a heavy-handed approach can sometimes backfire and garner greater sympathy for the workers and their cause.”

In the Leger poll, 32 per cent of respondents said they looked for alternative locations to buy alcohol due to the strike, and while 15 per cent said they were concerned the strike could cause them to spend more money on alcohol.

Savage said while many consumers are likely inconvenienced, he also thinks most Ontarians are suspicious of the premier’s intentions when it comes to the LCBO: “It’s a classic case of private profits over the public good.”

This report by The Canadian Press was first published July 17, 2024.

 

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Half of Ontarians support union’s goals in ongoing LCBO strike: poll

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Fewer than one-third of Ontarians say they want the provincial government to intervene to end the 12-day strike at Ontario’s main liquor retailer, while about half are supportive of the striking union’s demands.

That’s according to a new Leger poll that asked if the government should use binding arbitration or legislation to ensure LCBO stores open as soon as possible.

Twenty-nine per cent of respondents supported such a move, while 44 per cent opposed it. The poll also asked if respondents support the union’s stated goals, including wage increases and more permanent positions. Just under half, 49 per cent, answered in the affirmative, while 25 per cent said they were not supportive.

Awareness of the strike in Ontario is high, according to the poll, with 89 per cent saying they knew about it, though only 15 per cent reported being personally affected. The Leger poll of 601 residents, conducted last weekend, can’t be assigned a margin of error because online surveys are not considered truly random samples.

Approximately 10,000 workers at the LCBO walked off the job on July 5 after negotiations broke down.

The union representing the workers said the sides were headed back to the bargaining table Wednesday.

The Ontario Public Service Employees Union has said the main issue is the province’s alcohol expansion plans that would see ready-to-drink cocktails sold outside LCBO stores — a move it maintains poses an existential threat to the LCBO and could lead to major job losses.

Colleen MacLeod, chair of the union’s LCBO bargaining unit, has said the plan would “mean thousands of lost jobs, fewer hours for the 70 per cent of LCBO retail workers who are casual and struggling to make ends meet, and hundreds of millions in dollars of lost public revenues drained from health care, education and infrastructure.”

The LCBO, a Crown corporation, nets the province $2.5 billion a year.

On Monday, the Ontario government sped up its expansion plan. The 450 stores across Ontario already licensed to sell beer, wine and ciders will be able to start ordering coolers and seltzers on Thursday and sell them as soon as they arrive.

The province has said it does not want to privatize the LCBO, and that the expansion is about giving people more choice and more convenience to buy alcohol.

Stephanie Ross, an associate professor in the school of labour studies at McMaster University, said Premier Doug Ford doesn’t have a great reputation when it comes to labour, given the high-profile disputes in recent years with health-care and education workers. And he’s faced accusations of making policy moves that benefit friends in the private sector, a criticism that’s been levied against him in the LCBO dispute.

“There is a base of support for the union’s message here, both in terms of the working conditions that they’re trying to fight to improve, and in terms of the role that the LCBO plays in funding public services in the province,” she said.

But the public may not be as sympathetic to LCBO workers as it has been to some others, like in the Metro grocery workers’ strike last year, she said — a relatively straightforward fight by low-paid workers struggling to afford food against the industry being partially blamed for food prices.

“And so in the depths of a kind of historic cost-of-living crisis, I think it was easier to feel sympathy for such workers in terms of really having to fight to make up lost ground.”

That means the LCBO union has its work cut out to try and convince the public of its cause, said Ross, especially when consumers are already divided on the liquor privatization issue in the first place. She thinks the union is doing a good job, however, of arguing the case for the LCBO as a public asset that helps fund important public services.

Larry Savage, a professor in the labour studies department at Brock University, said it’s clear both the union and the Ford government “are working hard to win over the public to their respective positions.”

The union has a “potentially powerful strategy” to gain public support, but it’s not a surefire one, he said in an email.

This strategy “requires people to connect the dots between the privatization of the LCBO and the loss of a critical revenue stream that contributes billions to public services like health care and education.”

Meanwhile, the government’s strategy has been to try and leverage consumer frustration over the strike in order to drive more support for increased privatization, said Savage.

“It’s a high-risk strategy because a heavy-handed approach can sometimes backfire and garner greater sympathy for the workers and their cause.”

In the Leger poll, 32 per cent of respondents said they looked for alternative locations to buy alcohol due to the strike, and while 15 per cent said they were concerned the strike could cause them to spend more money on alcohol.

Savage said while many consumers are likely inconvenienced, he also thinks most Ontarians are suspicious of the premier’s intentions when it comes to the LCBO: “It’s a classic case of private profits over the public good.”

This report by The Canadian Press was first published July 17, 2024.

 

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Being Angry at Employers for Looking out for Their Interests Won’t Land You a Job

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The current job market is a stark reminder of a fundamental truth: The employee-employer relationship is inherently asymmetrical. This asymmetry is the default of the employer taking on the risk of investing capital while employees only invest their time. Employers have the upper hand, and the right to work ultimately depends on their decisions, as evidenced by layoffs.

 

Employees don’t own their jobs; their employers do.

 

In the face of rejection after rejection, job seekers become frustrated and angry, blaming employers for being unreasonable, greedy, or only looking out for their interest, as if their employers are in the business of hiring people. This mindset is counterproductive and will only hinder your ability to land a job.

 

I don’t think job seekers are angry with employers. I think they’re angry because they were in demand, and now they’re not. Recently, the tech industry has had more than its share of layoffs. Most likely, until now, those laid off had only experienced being highly sought after. A shift of this kind requires humility, which is lacking amid all the anger directed at employers.

 

When making a hiring decision, the employer rightfully prioritizes its interests over those of the job seeker. Employers seek candidates who can deliver value and contribute to their organization’s success. In contrast, job seekers look for roles that fit their skills, experience, and career goals. Employers looking after their interests aren’t wrong or nefarious; it’s simply smart business.

 

Employers’ self-interests are not your enemies. Instead, use them to your advantage by identifying them and positioning yourself as the solution. Demonstrating how you’ll support the employer’s interests will turn you from a generic candidate into an asset.

Three strategies can be used to align your self-interests—presumably landing a job—with those of an employer (Envision, “You scratch my back, and I’ll scratch yours.”):

 

Understand the employer’s priorities, the obvious being to generate profit.

 

Job seekers tend to focus solely on the job description and the required qualifications and overlook the company’s overall goal(s). Knowing (read: researching) the company’s goals will enable you to explain how your skills and experience can support their goals.

 

Suppose you’re applying for a marketing coordinator role at a rapidly growing tech startup. The job posting lists key responsibilities, including managing the company’s social media accounts, creating content, and planning events. However, after studying the company holistically, you find, like most companies, it prioritizes gaining new customers.

 

With this knowledge, you can position yourself as a candidate who can help drive that growth by emphasizing, using quantifying numbers (e.g., In eight months, increased Instagram followers from 1,200 to 32,000.) in your resume, LinkedIn profile, cover letter and during your interview, your experience developing high-performing social media campaigns attracting new leads for previous employers. You could mention your innovative ideas for using user-generated content to raise brand awareness or partnering with industry influencers. The key is to show that you possess the required functional skills and understand the company’s overall goals and how you can help achieve them.

 

Explain how you’ll make your ‘to-be’ boss’s life easier.

 

Your ‘to-be’ boss is juggling a million competing priorities, budget constraints, and pressure from their boss to optimize their team’s productivity.

 

Position yourself as the candidate who’ll simplify your ‘to-be’ boss’s life, and you’ll differentiate yourself from other candidates. During the interview, make it a point to understand the specific pain points and challenges your ‘to-be’ boss is facing—I outright ask, “What keeps you up at night?”—and then present yourself as a solution.

 

Perhaps the department has a retention problem. You could tell a STAR (Situation, Task, Action, Result) story, demonstrating your ability to build strong cross-functional relationships and create a positive work culture that boosts employee engagement and loyalty.

 

Educating your prospective boss that by hiring you, they’ll have one less headache is a hard-to-ignore value proposition.

 

Show how their success is equal to yours.

 

Hiring boils down to finding candidates who can drive measurable business results. Don’t rely solely on your skills and experience. Outline how you can deliver tangible benefits to the employer. Quantify the value you’ve brought to previous employers.

 

If you’re applying for a sales role, share data on the year-over-year revenue growth, client retention rates, and customer satisfaction scores you achieved in your previous positions. Quantify the value you brought to the organization, then explain how you can replicate or exceed that level of performance in the new role.

 

Say you’re interviewing for an IT support position. In addition to highlighting your technical expertise, again using a STAR story, highlight your expertise in streamlining processes, reducing downtime, and providing exceptional customer service. Tie those accomplishments back to the employer’s need to maximize productivity and minimize disruptions.

 

The key is to make a compelling case that the employer also succeeds when you succeed.

 

It’s understandable to feel frustrated by rejection, but the most successful candidates recognize that employers have legitimate business priorities. Identifying an employer’s interests and showing how you can support them will improve your chances of landing a job. Stop expecting an employer to save you. Save an employer.

_____________________________________________________________________

 

Nick Kossovan, a well-seasoned veteran of the corporate landscape, offers “unsweetened” job search advice. You can send Nick your questions to artoffindingwork@gmail.com.

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