Sometimes, the blog gets lucky with its timing. A week ago, it wrote bearishly on crude oil markets, and suggested that "chemical companies need to keep a close eye on changing sentiment in financial markets". By Friday, oil prices had tumbled 11%, as the US S&P 500 index continued to weaken from its 12 June peak.
The blog does, however, feel able to give itself another pat on the back for its underlying analysis. Back in May, it thought there was a good chance that oil prices (then $60/bbl) could well see a "move towards $80/bbl by the summer, if investors remain confident". And it also cautioned that if financial market "sentiment begins to change", then a downwards move towards "$40/bbl could happen very quickly".
The driver for the changing sentiment in financial markets seems to be changes in the US$: € rate. The evidence for this is as follows:
• The US$ hit a high of 1.26 versus the euro on 3 March
• The S&P 500 bottomed 3 days later at 666.
• The euro then rallied strongly, peaking on 3 June at 1.43 versus the US$
• The S&P 500 also rallied strongly, peaking on 11 June at 956.
And as the updated chart above shows, WTI continues to track the S&P very closely. It also peaked on 11 June, at $72.69/bbl.
The blog will keep a close eye on future $:€ developments. It would welcome readers' insights as to why these might currently be so crucial.