A strong rally for crude oil prices

Friday, August 28, 2015

Crude oil prices rallied yesterday and WTI front month futures climbed 10.26% to end the session at $42.56/barrel, showing their best performance since March 2009. This morning, WTI futures extended gains towards $43 per barrel, while Brent front month futures rebounded towards $48 per barrel. The recent oil fundamentals have been very optimistic as the latest weekly EIA oil inventories report showed a large drop of 5.45 million barrels in crude oil stocks for the week ending 21st August. In addition, strong US GDP data spread further optimism across global capital markets yesterday, increasing risk appetite and improving the general market sentiment.

WTI rallies over 10% towards $43/barrel

CLV5 Comdty (WTI CRUDE FUTURE  O 2015-08-28 08-54-37

Asian equity markets extended gains for a second consecutive session today as the Hang Seng index climbed towards 22,000 (+0.50%), while the Shanghai Composite index  rallied nearly 5% towards 3240. The Nikkei index followed the uptrend and rose over 550 points (+3%) above 19,100. Japan’s retail sales rose 1.2% m/m in July, beating analsyst’ expectations of a 0.6% rise.

European equities were fairly mixed in early trade this morning as the CAC and DAX indices hovered around the recent range, struggling for direction. The London equity benchmark index edged higher to retest 6,200 this morning, ahead of the key release of the UK GDP data. Sterling has experienced heavy selling during the last three trading sessions, retreating from a recent high of 1.5820 towards a low at 1.5370 yesterday. However, this morning, GBPUSD has slightly rebounded and traded around 1.5430 while all eyes are on the GDP data.  

GBPUSD hovers around 1.54 ahead of UK GDP data

GBPUSD Curncy (GBP-USD X-RATE)   2015-08-28 08-57-00

Market participants will be keeping an eye on the release of the US Personal income data in July as well as market expectations and current conditions from the University of Michigan survey. The USD index gave back yesterday’s gains and slid lower this morning, towards 95.50 against a basket of currencies. Gold has rebounded from recent declines and climbed above $1130 this morning, while silver has posted modest gains after hovering around $14.50. Base metals prices continue to remain under pressure with copper retreating over 1% this morning towards $5080.

Events for today:

0001

UK

Aug

GFK survey

0030

JP

Jul

CPI & Unemployment Rate

0230

CN

Jul

Industrial Profits

0930

UK

Q2

GDP

1000

EZ

Aug

Bus Climate & Con Sentiment

1330

US

Jul

Core PCE Price

1455

US

Aug

Michigan Survey (Final)

 

All times UK Local Time

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