• There are some challenges but the picture is not as negative as some make it to be
• The world economy is doing well
• We are very positive on demand both in the short and long-term
• Peak demand is not going to happen, the world keeps on growing

His comments come after the bloc decided to delay the planned output increase in December over the weekend here. As ever, OPEC remains the one to be the most bullish about the oil market prospects and unsurprisingly so.

This article was written by Justin Low at www.forexlive.com.

The move here is to largely deal with „hidden debt“ or what is intricately known as debt arising from local government financing vehicles (LGFV). These are off-balance sheet debt that are incurred by local governments to finance big projects and infrastructure. For some context, local governments in the past were not allowed to sell bonds and so resorted to establishing LGFVs to raise funds.

*coughs* And surprise, surprise. That didn’t turn out too well. As of last year, IMF estimated China’s „hidden debt“ to be around above ¥60 trillion. That translates to roughly half of the country’s GDP. Danger, danger.

And with China’s property sector imploding in recent years, that has impacted revenues of local governments and in turn raises the odds of these LGFVs going bust. So, that brings us to where we are now.

Chinese lawmakers are now said to be considering a bill to raise ceilings on local government debt and this will effectively be a one-off measure to replace these supposed „hidden debt“. The Chinese ministry of finance has had many plans since 2015 to try and address this and this is just another part of that.

Just be wary though that this is a sort of left pocket to right pocket situation. What this effectively does is move the supposed „hidden debt“ back on to the balance sheets of local governments. It still does not completely address the fiscal sustainability of it all and the structural risks in servicing the debt.

But I would assume as part of this measure, China will also announce some plan to allow local governments to issue a sizable amount of bonds through the next three to four years to deal with all of this.

Otherwise, it’s not exactly a full proof plan and that will not ease investor concern and trust in Beijing’s handling of this matter. That especially with Xi having pinning this item as one of China’s three „major economic and financial risks“ – alongside the property market and financial sector concerns.

This article was written by Justin Low at www.forexlive.com.

Fundamental
Overview

Crude oil opened the day
with a positive gap today following the weekend news of OPEC+ delaying the December
production hike.

In the big picture, central
bank easing generally leads the manufacturing cycle, so we can expect global
growth to pick up and support the crude oil market. One risk that might be
weighing on the market is the US election as a Trump victory might be bearish
due to increased supply expectations.

It’s worth remembering that
in 2016, crude oil did fall initially on Trump’s victory but eventually rallied
for more than 20% in the following three months on higher global growth
expectations.

In case we get a red sweep,
the market will likely focus on global growth with Trump’s tax cuts. In case we
get Trump and a divided Congress, we can expect him to focus majorly on tariffs
and that could dent global growth and put some pressure on the market.

With Harris as President and a divided Congress we should see crude oil gaining as she needs a legislative action to raise taxes and has a
lighter stance on tariffs. A blue sweep could still be bullish but with a lesser degree.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil is now back at the key 71.67 resistance following the OPEC+ production hike
delay. The buyers will want to see the price breaking higher to increase the
bullish bets into the 77.60 level next. The sellers, on the other hand, will
likely lean on the resistance to position for a drop into the 65 handle.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor upward trendline defining the current bullish
momentum. The buyers will likely keep on leaning on it to keep bidding the
price up, while the sellers will want to see the price breaking lower to
increase the bearish bets into the 65 handle.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see the gap higher today following the weekend news with the price now near the
key resistance. There’s not much to add here as the buyers will look for a
break higher, while the sellers will step in to position for a drop into new
lows. The red lines define the average daily range for today.

Upcoming
Catalysts

Tomorrow we have the US ISM Services PMI and the US Presidential Election. On
Thursday, we have the US Jobless Claims and the FOMC Policy Decision. On
Friday, we conclude the week with the University of Michigan Consumer Sentiment
report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

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This article was written by FL Contributors at www.forexlive.com.