Saudi’s Oil Strategy Shift: A Barrel Half-Empty Approach


Simpler Trading Team

Jun 05th 2023  .  5 min read

The Dawn of a New Trading Week

The Monday Blues made an appearance on Wall Street as equities opened with minimal changes, clinging on to the heels of the previous week’s impressive 2% gain for the S&P 500. Asian markets, however, were basking in the sunshine, especially Japan’s Nikkei Index which soared to a 30-year high. The yield on ten-year Treasury bonds teased the 3.75% mark, a sizeable leap from recent weeks but a far cry from last year’s zenith.

Spotlight on the Sectors

As the business day unfolded, the energy sector emerged as a particularly compelling focus of attention. Triggering this interest was an almost 2% climb in crude oil prices, a reaction induced by the surprising news that Saudi Arabia and Russia had jointly elected to curtail their oil production.

The move by these significant oil-producing nations generated ripples across the global energy landscape. It sparked a veritable bonfire under the price of crude oil, yet, it’s worth noting that prices remain notably shy of the $84 per barrel threshold that was breached in April, thus moderating the full impact of this upswing.

This buoyancy in the energy sector occurred against the backdrop of a broader market that was collectively catching its breath after the resolution of the recent debt-ceiling saga. Amidst this respite, investors were thrown back into the enduring battle between the forces of inflation and the ebbs and flows of economic activity.

The Chess Game of Heavyweight Stocks

The oscillations of technology stocks made for an interesting subplot in today’s market dynamics. Particularly, tech giants Apple (AAPL) and Intel (INTC) found themselves on an unpredictable ride on the Wall Street roller coaster.

Shares in AAPL took a downward plunge of 1.1%, contributing to a palpable weight on the Vanguard Mega Cap Growth ETF (MGK), an ETF heavily weighted in technology stocks. On the other hand, INTC found itself underperforming in the Dow Jones Industrial Average (DJIA), a decline sparked by Apple’s announcement of a new in-house chip, which could threaten Intel’s market share.

Despite the stormy seas, several stocks managed to navigate the turbulent waves with finesse. Companies such as Bath & Body Works (BBWI), Fortinet (FTNT), and Paycom (PAYC) defied the prevailing currents, posting notable climbs and emerging as leaders in today’s trading session.

Navigating the Economic Currents

In the realm of the financial markets, anticipation often holds as much power as the events themselves. Currently, that anticipation is focused squarely on the upcoming inflation report and the next Federal Reserve meeting.

Recent economic data presents a kaleidoscopic picture that market participants are scrambling to interpret. The labor market, for instance, continues to exude a healthy glow, showcasing a resilience that reassures observers of its underlying strength.

However, this optimistic picture is somewhat tainted by signs of a broader economic slowdown. Warning signals are beginning to flash, igniting concerns about a potential pullback in economic growth. This juxtaposition of strong labor market performance against a backdrop of a wider slowdown creates a complex and uncertain environment.

In the current economic landscape, the Federal Reserve faces a delicate balancing act. It’s challenged with addressing the escalating inflation rates without excessively curtailing economic growth, a maneuver that hinges greatly on understanding supply and demand dynamics. This high-stakes situation keeps market spectators, ranging from large-scale institutional investors to individual day traders, keenly monitoring every Federal Reserve decision. They aim to decipher potential implications on the US economy’s trajectory and the subsequent ripple effects on the markets.

Mastering the principles of supply and demand can provide traders with a distinct edge over others in the marketplace. Jonathan McKeever, who leads Supply & Demand Trading at Simpler Trading, leverages this understanding to outwit major institutions, achieving impressive success in 80% of his trades. The cornerstone of his trading strategy? A deep comprehension of supply and demand.

In an upcoming webinar scheduled for this Wednesday evening at 7PM, McKeever is poised to unveil the strategic insights that have been pivotal to his consistent trading success. If you’re interested in learning how to better understand supply and demand to optimize your trading results, you can register for the webinar HERE.

The Curtain Call

In marking the end of another trading day, the performance of the major indices offers a window into the day’s market dynamics. The Dow Jones Industrial Average, one of the most closely watched indices, concluded at 33,562.86, signifying a downtick of 0.59% or 199.90 points. This slight drop indicates the investors’ mixed sentiments and cautious approach toward the market.

Equally noteworthy is the NASDAQ Composite Index, renowned for its significant concentration of tech stocks. It closed the trading day at 13,229.43, suffering a marginal dip of 0.09% or 11.34 points. Despite this minor setback, it showcased the inherent volatility of the technology sector and mirrored investors’ expectations of the future economic prospects.

Next up, the S&P 500 Index, often considered a reliable barometer of the U.S. equities market, ended the day at 4,273.79, shedding 0.20% or 8.58 points. This slight decrease embodies the day’s cautious trading and provides a broader perspective on the market’s health.