Oil Prices at 1-Year Low; Why Isn't Wall Street Filling Up?
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What is the main topic discussed in this episode?
With your money briefing, I'm J.R. Whelan at The Wall Street Journal in New York.
Why have oil prices fallen to a one-year low and what does that mean for investors?
Oil prices have hit a one-year low, but why isn't Wall Street jumping in to buy? And for investors, will it be time to buy oil anytime soon? We'll call on the journal's oil markets desk for some answers in a moment. First, these money and market stories you should know.
What housing and mortgage data are affecting broader market sentiment?
Purchases of newly built single-family homes fell 8.9% to a seasonally adjusted annual rate of $544,000 in October. That's the steepest decline since December of last year. And all U.S. regions experienced new home sales declines last month, with sales in the Northeast dropping 18.5% on the month. One contributor are mortgage rates, which have climbed in the last year to just shy of 5%. A level analysts say could also deter many would-be buyers.
How did bitcoin's recent rebound and consumer trade concerns factor into market outlooks?
Many current homeowners are unwilling to sell as well because such a move would mean foregoing their low interest rates. Bitcoin's steep fall took a break at least for a day. The cryptocurrency was up about 11% on Wednesday, closing at about $4,400. A year ago,
Why are Wall Street traders reluctant to buy oil despite lower prices?
It was moving higher on its way to its all-time high of about $20,000. And Wall Street Journal chief economics commentator Greg Ip says that consumers should be wary of the effects of potentially less trade that could result from tariffs. He points out the value consumers place on variety could be in jeopardy if trade is hampered from overseas. He also writes Americans are much more likely to find the perfect fit for their tastes if their choices include scotch whiskey, French cheese, and Scandinavian crime fiction. See his full column on WSJ.com or the WSJ app.
Would you give up checking out a big sale and making a purchase? Well, that's what oil traders are doing after oil prices hit a one-year low. We put a call in to Wall Street Journal reporter Stephanie Yang to help us understand this, and she joins us now. Stephanie, thanks for stopping by.
Thank you. Happy to be here.
So the broader market downturn, this big downturn we saw in the past six weeks, is still sending shivers through trading circles, including those on the oil side.
Yeah, it's just it seems like it's been so much so quickly that a lot of people are reluctant to kind of get back in, even though, you know, a lot of analysts are saying, OK, well, this looks like a really good price for oil to, you know, be bullish again. I think there are just, you know, some uncertainties on the horizon and the year is coming to an end. And that's really just has everyone kind of cautious.
You know, even Goldman Sachs seems to be puzzled as to why oil traders are not back waving the buy signal.
Yeah.
Which geopolitical and supply factors could drive oil prices higher or lower soon?
So according to Goldman Sachs analysts, they think that this is an attractive buying opportunity. A couple of the things that people are looking at going forward is, you know, any news on the U.S.-China trade talks, whether or not that's going to ease concerns about global demand growth. Another thing that really could be kind of a catalyst for higher oil prices is the OPEC meeting coming up in December, whether or not the oil cartel and their allies decide to cut back on production, which could send prices higher. So that's A couple of things people are looking at right now, but it's all going to be playing out in the next few weeks.
And then you have the sanctions against Iran, which are not blanket sanctions. Seems like some countries can do business with Iran and not. Otherwise, you might think that the pullback in supply from Iran might drive prices higher. It hasn't really happened.
Right. That was kind of the expectation throughout the entire year, starting in the spring. And that's what drove prices to four year highs in October. Then all of a sudden it seemed like that wasn't the case. And going forward, this is also a big question mark because a lot of traders are looking at, you know, the Trump administration and whether or not they're going to continue to be lenient on big buyers of Iran or whether they're going to get more strict in the new year.
And even the net long future positions have fallen to 12 month lows.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:09
2
Why have oil prices fallen to a one-year low and what does that mean for investors?
0:09–0:24
3
What housing and mortgage data are affecting broader market sentiment?
0:24–0:53
4
How did bitcoin's recent rebound and consumer trade concerns factor into market outlooks?
0:53–1:09
5
Why are Wall Street traders reluctant to buy oil despite lower prices?
1:09–2:44
6
Which geopolitical and supply factors could drive oil prices higher or lower soon?
2:44–4:20
7
When could OPEC decisions or U.S. shale production change the oil market direction?
4:20–4:55
Speakers
2 identifiedMore from WSJ Your Money Briefing
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