Oil is headed for its biggest weekly gains since the middle of January as supply disruptions and rising demand supported sentiments. 

A weaker US dollar also boosted demand for the commodity.

A weaker dollar makes commodities priced in the greenback cheaper for overseas buyers. 

Oil’s gains this week come despite losses on Friday.

Benchmark contracts fell on Friday on uncertainty over trade flows and US tariffs. 

At the time of writing, the price of West Texas Intermediate crude oil was at $71.86 per barrel, down 0.8%.

Brent crude oil on the Intercontinental Exchange was 0.8% lower at $75.87 a barrel. 

Sharp gains this week

Both Brent and WTI crude oil prices have experienced a significant upswing this week, with each gaining approximately 2%. 

This marks the most substantial weekly increase for both benchmarks since the beginning of January. 

For Brent crude, this positive movement signifies a second consecutive week of gains, following a period of three weeks of decline. 

Conversely, WTI crude is poised to achieve its first week of gains after enduring four consecutive weeks of losses. 

This recent price surge suggests a potential shift in market sentiment and could indicate a possible recovery in the oil market. 

However, it remains to be seen whether this upward trend will continue in the coming weeks, as various factors, including geopolitical developments, global economic conditions, and supply-demand dynamics, continue to influence oil prices.

David Morrison, senior market analyst at Trade Nation said:

The overall picture looks more positive than it has done for a month or so. It’s possible that oil may have found an intermediate bottom, having dropped 12% from its recent high in mid-January.

Supply disruptions

A Ukrainian drone attack on a pumping station caused a 30-40% reduction in oil flows through the Caspian Pipeline Consortium (CPC) on Tuesday, according to Russia. 

The CPC is a major export route for crude oil from Kazakhstan.

Despite the damage to this key export route, industry sources revealed to Reuters on Thursday that Kazakhstan has been pumping record-high oil volumes. 

The exact mechanism by which Kazakhstan achieved this feat remains unclear.

Meanwhile, gasoline and distillate inventories in the US fell last week, according to the Energy Information Administration. 

“The market responded to declining stockpiles as refinery maintenance limited processing capacity, supporting expectations of robust demand,” Arslan Ali, analyst at FXempire, said in a report. 

Possible resumption of Iraq’s exports

However, the Iraqi oil minister announced on Monday that oil exports will soon resume from the semi-autonomous Kurdish province in Northern Iraq, which could mean additional oil will be entering the market shortly.

At the Munich Security Conference at the weekend, the Prime Minister of the Kurdish Provincial Government spoke of the resumption of exports by the end of March, according to a Commerzbank AG report. 

Oil supplies via a pipeline to the Turkish Mediterranean port of Ceyhan have been interrupted for almost two years due to a dispute over marketing rights and the ruling of an arbitration court in this matter.

“The resumption of oil shipments would increase Iraq’s oil supply by around 300 thousand barrels per day ceteris paribus and lead to another problem,” Carsten Fritsch, commodity analyst at Commerzbank, said. 

Iraq’s commitment to the OPEC+ agreement, which limits its oil production to 4 million barrels per day, is the reason for this.

Fritsch said:

Hence, Iraq has no leeway to increase oil production if it does not want to violate its production ceiling.

Moreover, some market chatter pointed to the Organization of the Petroleum Exporting Countries and allies extending their production cuts of oil beyond March at its upcoming meeting.

This would be bullish to oil prices if the cartel postpones its plan to gradually unwind the 2.2 million barrels per day of voluntary output cuts.

The group had already extended these cuts multiple times last year.

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President Trump’s tariff threats have boosted stock market volatility, but not by much.

Despite some relatively large intra-day swings, traders have taken tariffs in their stride.

This may be due to the lack of much follow-through, despite all the bluster, coupled with the popular view that deals will be done thereby ensuring that neither the US nor the global economy as a whole takes a hit. 

Focusing on the NASDAQ 100 for a minute, the index posted a significant record closing high in mid-December.

It pulled back sharply after that, with the ‘hawkish’ US Federal Reserve monetary policy meeting acting as a catalyst for some hefty profit-taking.

This was when the Fed cut rates by 25 basis points, as expected while indicating that it was in no rush to loosen further.

This seemed reasonable given that inflation had ticked up since the summer, while the underlying economy was robust.

The low unemployment numbers and the impressive earnings growth across S&P 500 constituents gave no reason for the Fed to goose risk assets any further. 

The US central bank could be criticised for cutting rates as aggressively as it did, starting in September with, what many believed, was a thoroughly unwarranted 50 basis point cut.

It appears that members of the Fed’s FOMC got freaked out by a couple of disappointing Non-Farm Payroll numbers, which were subsequently revised higher.

Given that Fed members are always banging on about ignoring individual data points in favour of studying the underlying trend, this ruffled some feathers.

Some observers even suggested that the rush to cut rates so aggressively ahead of the Presidential Election implied some political motivation. 

But the bottom line was that most market participants were desperate for lower rates, including Donald Trump.

And, similarly to the same time in 2023, most anticipated additional cuts throughout the following year.

December’s Fed meeting gave a strong warning that it wasn’t to be, and stock markets acted accordingly. 

The bulls backed off on concerns that without easier monetary policy, equities could be in for a rocky year.

Since then, the NASDAQ and the S&P 500 have been consolidating in fairly wide ranges.

Sentiment wasn’t improved by the threat of President Trump’s tariffs. But a solid fourth-quarter earnings season has helped to steady nerves.

And so far this year there’s been a broadening of interest beyond the mega-cap ‘Magnificent Seven’ into smaller corporations with less expensive valuations. 

So, the S&P 500 and NASDAQ 100 continue to consolidate, with both trading near their respective all-time highs.

Looking at their daily MACDs, neither index appears particularly overbought.

Can they break out from here to new all-time highs?

It’s certainly possible, but then what?

There are concerns.

The tariff issue could get worse from here, rather than better.

And what if Trump’s insistence on bilateral talks with Russia to end its war with Ukraine backfires? 

Inflation is picking up again, so it looks as if the catalyst for lower interest rates will be an economic slowdown rather than falling inflation.

That wouldn’t be the kind of environment in which equities perform well.

Recent history suggests that these are all factors that investors will happily ignore, preferring the mantra that: ‘Stocks always go up’.

Could that belief be about to be tested?

(David Morrison is a Senior Market Analyst at Trade Nation. Views are his own.)

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UnitedHealth Group (UNH) shares declined more than 11% in premarket trading after The Wall Street Journal reported that the Justice Department has launched a civil fraud investigation into the company’s Medicare billing practices.

Shares were trading around $443.53 following the report.

The probe examines how UnitedHealth records diagnoses that lead to increased payments from Medicare Advantage, a privately administered version of the federal health program for seniors.

According to the report, the government is scrutinizing whether the insurer’s physician groups have engaged in practices that inflate reimbursements.

The Justice Department’s move comes amid broader concerns about the rising costs of Medicare Advantage.

In a 2024 report, congressional Medicare advisers highlighted an “urgent need for a major overhaul” in the program’s payment system, which they believe is vulnerable to manipulation.

This investigation adds to the company’s challenges as the DOJ is also attempting to block UnitedHealth’s $3.3 billion acquisition of Amedisys (NASDAQ:AMED) over antitrust concerns.

UnitedHealth’s buyout program

Separately, UnitedHealth has initiated a voluntary buyout program for some employees in its UnitedHealthcare division.

The Voluntary Resignation Separation Program, as it is called, applies to workers in the benefits operations unit.

Employees who choose to resign by March 3 will receive a financial package, while those who decline the offer will either retain their current jobs or be moved to comparable roles, sources told CNBC.

The internal memo seen by CNBC indicated that the buyout applies to full-time and part-time workers across four subdivisions: corporate, consumer operations, core services, and provider services.

While UnitedHealth has not disclosed the total number of employees offered buyouts, the program reportedly affects up to 30,000 workers.

A company spokesperson stated that the initiative is aimed at ensuring UnitedHealth’s workforce remains well-positioned to serve its customers effectively.

However, sources noted that if the company does not meet a specific resignation target, layoffs may follow.

Bernstein reaffirm Outperform rating

Bernstein analysts, including Lance Wilkes, on Friday reaffirmed their Outperform rating on UnitedHealth Group (NYSE: UNH), maintaining a price target of $697.00.

The analysts noted that UnitedHealth’s diversified business model—including its Optum segment, which focuses on value-based care—positions it for continued growth.

The buyout program aligns with UnitedHealth’s broader cost-cutting strategy, analysts said.

The company has managed to keep its total operating expenses flat for 2024 and expects only a modest increase in 2025.

Analysts forecast that the company will reduce its operating expense ratio by 1.5% this year, with an additional 1.0% decline projected for 2025.

UnitedHealth’s cost-cutting measures primarily focus on its core health insurance business, UnitedHealthcare, with anticipated improvements in claims processing, customer service, and other operational areas.

While UnitedHealthcare undergoes efficiency-driven changes, continued investment is expected in the Optum units, particularly Optum Insights and Optum Health, which focus on value-based care.

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Germany heads to the polls on Sunday, and the stakes couldn’t be higher. Europe’s largest economy is stuck in neutral, struggling with weak growth, high energy costs, and fading industrial dominance.

The “traffic light” coalition of the Social Democrats (SPD), Greens, and Free Democrats (FDP) collapsed last year, leaving voters to decide who gets the next shot at reversing the decline.

Polls suggest the conservative CDU, led by Friedrich Merz, will take the lead. But a surge from the far-right AfD, amplified by Elon Musk’s vocal support, has voters concerned.

Whoever wins will inherit an economy that’s no longer the powerhouse it once was and it will be up to them to resurrect it. But so far, things aren’t looking so bright for Germany.

The state of Germany’s economy

Germany’s post-pandemic recovery just never happened. Since 2023, the economy has shrunk twice in a row.

That is the first back-to-back contraction since the early 2000s. The International Monetary Fund expects just 0.3% growth this year.

For an economy that once set the pace for Europe, that’s a clear sign something’s broken.

Energy prices are the most obvious problem. After Russia cut off gas supplies in 2022, Germany turned to liquefied natural gas (LNG) from the US and Qatar.

It worked, but at a cost. German manufacturers now pay twice as much for energy as their US competitors.

Industries like steel, chemicals, and glass are cutting production or moving abroad. Porsche just announced 1,900 job cuts, and smaller factories are quietly closing shop.

But energy alone doesn’t explain the crisis. Germany’s industrial backbone, machinery, cars, and chemicals, face tougher competition than ever, especially from China.

Once a reliable customer, China now builds its own high-tech products, from electric vehicles (EVs) to industrial equipment. German exports are shrinking, and the old “Made in Germany” advantage is fading.

Can the next government turn things around?

Whoever wins on Sunday will face tough choices. The CDU, polling around 30%, promises tax cuts, deregulation, and faster energy expansion.

Merz talks about “unleashing the economy” by cutting red tape and making it easier to build factories and power lines.

It’s a familiar playbook, but it’s not clear how it’ll tackle deeper problems like workforce shortages and digital infrastructure.

The SPD and Greens, trailing at 16-17% and 12-14%, respectively, favor more public investment.

They want to expand renewable energy, upgrade rail networks, and boost childcare to get more women into the workforce.

But Germany’s “debt brake,” a constitutional rule capping government borrowing, limits how much they can spend.

The last coalition fell apart arguing over whether to loosen this rule. Merz has already said he won’t budge.

Meanwhile, the AfD which is rising in popularity, now polling at around 20%, offers a nationalist economic vision: end Germany’s green transition, lower energy costs by reviving coal and nuclear, and curb immigration.

Their message resonates in struggling industrial regions. Yet economists warn their policies could isolate Germany from EU markets and global trade, the very lifelines keeping its economy afloat.

All mainstream parties, including the CDU, SPD, and Greens, have categorically ruled out working with the AfD in any coalition.

This political isolation means that even a strong AfD showing is unlikely to translate into real power.

At least for now. If the next government fails to provide meaningful change, who knows how the public will react in 4 years time.

Is Elon Musk really shaping the German election?

Elon Musk’s sudden embrace of the AfD has injected unexpected volatility.

It started with his interaction with Naomi Seibt, a German influencer known as the “anti-Greta Thunberg.”

Musk soon began praising the AfD, calling it the only party that “can save Germany.”

He even interviewed AfD leader Alice Weidel on X and appeared virtually at an AfD rally.

This endorsement matters because it’s amplified AfD messaging far beyond Germany’s borders.

Musk’s posts and retweets have pushed Weidel’s X following past 985,000, dwarfing rival politicians.

But while the AfD’s online presence has exploded, it’s less clear whether this will translate into more votes.

Traditional German media remains skeptical of Musk, and many voters see his comments as interference rather than insight.

Trump makes things even harder for Germany

Just as Germany struggles with its own domestic issues, Donald Trump’s return to the White House has reignited trade fears.

He’s already announced 25% tariffs on steel, aluminum, cars, and semiconductors which are all key German exports.

The US is Germany’s largest single export market, accounting for 10% of its total exports.

If tariffs expand, Germany’s struggling automakers, who are already losing market share to Tesla and Chinese brands like BYD will suffer even more.

German automakers, including Volkswagen and BMW, already produce cars in Mexico to bypass tariffs. But Trump has also slapped duties on Mexican imports.

The German central bank warns that if universal tariffs rise to 10%, German GDP could shrink further, deepening the current recession.

The uncomfortable truth

No party will win an outright majority. The CDU will likely lead coalition talks, probably with the SPD or Greens.

Merz has promised to form a government by Easter, but if negotiations drag on, as they often do, Germany could face months of political gridlock.

But forming a government is just the start. Without decisive action on energy costs, workforce shortages, and industrial competitiveness, Germany’s economy risks sliding from stagnation into long-term decline.

The political debate has largely avoided hard questions about how to fund infrastructure upgrades, attract skilled immigrants, or accelerate industrial innovation.

Here’s the uncomfortable truth: No party has a fully credible plan to fix Germany’s economy.

The CDU promises deregulation without addressing energy prices.

The SPD and Greens push investment without explaining how to bypass the debt brake.

The AfD blames migrants while ignoring Germany’s ageing workforce and shrinking industrial competitiveness.

If the next government continues to patch problems rather than tackle root causes, Germany’s economic drift will continue, no matter who sits in the chancellor’s office.

For voters, Sunday’s choice is less about ideology and more about who’s best prepared to confront reality. So far, no one has made that case convincingly.

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Although inflation has eased from its peak, it remains a concern for investors and policymakers alike.

The consumer price index (CPI) has fallen from a 9.1% high in June 2022 to 3% in January, but it remains above the Federal Reserve’s 2% target.

“The progress toward 2% inflation has stalled out, and the Fed knows it,” said Greg McBride, chief financial analyst at Bankrate.com.

Some Fed officials are also wary of the impact that tariffs could have on inflation in the months ahead.

With inflation still a key issue, investors looking to preserve their purchasing power are turning to Treasury Inflation-Protected Securities (TIPS) as a potential safeguard, a report by CNBC said.

What are TIPS and how do they work?

TIPS are issued by the US government and function similarly to standard Treasury bonds but with a key difference: their principal value adjusts with inflation.

When inflation rises, so does the bond’s principal, ensuring that investors retain their purchasing power.

By contrast, regular Treasury bonds and certificates of deposit (CDs) may lose value in real terms if their yields fail to keep pace with inflation.

The benchmark 10-year Treasury bond is currently yielding just under 4.5%, a rate that could struggle to outpace inflation in the long run.

TIPS are available in 5-, 10-, and 30-year maturities.

When they mature, investors receive either the adjusted principal or the original principal, whichever is higher.

Interest payments, calculated based on the adjusted principal, increase as inflation rises.

Growing investor interest in TIPS

Recent concerns over tariffs and potential inflationary pressures have led to renewed interest in TIPS, according to a report by Wells Fargo Investment Institute.

“TIPS continue to be a valuable tool for protecting purchasing power in an inflationary environment,” said Douglas Boneparth, president of Bone Fide Wealth.

“With yields currently near decade highs, they’re certainly more attractive than in recent years.”

However, TIPS are not without risk.

Colin Gerrety, a client advisor at Glassman Wealth Services, pointed to 2022 as an example of how rising interest rates can negatively impact TIPS returns.

“Let’s say inflation spikes and interest rates rise at the same time,” he explained.

“TIPS might actually lose money if the negative impact from the rise in rates exceeds the adjustment that occurs due to inflation.”

Indeed, TIPS had a negative 11.85% return in 2022, though they still outperformed standard US Treasurys.

How to accommodate TIPS into a broader strategy

As investors weigh their options, some experts recommend a diversified approach that combines TIPS with other income-generating assets.

Winnie Sun, managing director of Sun Group Wealth Partners, advises a mix of fixed-income TIPS, dividend-paying stocks, and laddered CDs to balance risk and return.

“I usually advise clients to view TIPS as one part of a diversified portfolio rather than a standalone solution,” said Boneparth.

While TIPS offer inflation protection, investors must also consider tax implications and the potential for lower returns if inflation moderates.

As the Federal Reserve continues to monitor inflation trends, the role of TIPS in an investment portfolio remains an important consideration for those looking to safeguard their assets.

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