Morning market update

Morning market update

 US & European markets lower, WTI crude oil jumps, base metals spring back, ASX futures down 4 points

After selling off following the de-escalation of the Iraqi turf war and plentiful US oil inventories, West Texas Intermediate oil turned sharply on Wednesday last week. This was the day when the US Energy Information Administration (EIA) released crude/refined inventory data that showed a much larger decrease in US crude reserves than was expected (7.5 million barrels less versus expectations of 2.1 million barrels less), which marked a short-term turning point in the price of WTI, which is shown clearly in the hourly WTI crude (Rivkin: OILUSSEP14) chart below, taken from Rivkin Trader.

The second chart illustrates the relatively sharp recovery of WTI crude (OILUSSEP14 in orange) versus Brent crude (OILUKSEP14 in black), which is a trend that could well continue if there is more to this US inventory story than just last week’s report. You may recall that in late June I wrote about a successful application in the US by a couple of US producers wishing to export oil, with the US Commerce Department approving the release of 500,000 barrels of oil per day. I have very little doubt that the production of oil shale in the US will give producers and departments related to energy security the ability to control inventories to their liking in the medium-to-short term, but last night’s 1.5% pop in the WTI crude price may indicate that short-term speculators are anticipating another weekly decline in the EIA’s inventory data when it is released tomorrow night.  

For those Rivkin Trader clients wishing to trade the WTI versus Brent crude spread, please phone +612 8302 3650 and speak with a dealer, who can assist you in getting the trade implemented correctly.

Most metals prices bounced back last night: aluminium +1.97%; copper +0.61%; nickel +0.88%; zinc +1.86%; iron ore -0.62%; and gold flat.

FX and Index traders take caution: Glenn Stevens will speak in Sydney at 1pm today and will likely attempt, once again, to ‘jawbone’ the Aussie dollar lower (and I stress the word ATTEMPT), and US CPI data will be released at 10:30pm tonight.

Overnight

  • Dow down 48.45 points/0.28%
  • S&P 500 down 4.59 points/0.23%
  • NASDAQ down 7.44 points/0.17%
  • German DAX down 107.97 points/1.11%
  • WTI sharply higher and Brent crude higher at US$104.58 and US$107.68
  • Gold and silver flat at US$1,314.00 & US$20.97

AU Market Preview

  • AUDUSD lower at US$0.9363
  • SPI 200 futures 4 points lower
  • Roy Morgan (Aus) consumer confidence index out at 9:30am, RBA gov Glenn Stevens to speak in Sydney at 1pm, Japanese leading indicators index out at 3pm, US CPI out at 10:30pm, all Sydney time.

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