A strong rebound for the oil market

Wednesday, May 06, 2015

The weak USD provided strong support to most commodity prices. Crude oil prices rallied higher for a second consecutive session as WTI front month futures climbed above $61 per barrel and Brent futures surged to retest $69.50 per barrel. The weekly EIA oil inventories report spread optimistic signs in the market after showing an unexpected large decline of 3.88 million barrels in crude oil stocks for the week ending 1st May. The significant decline in crude stocks has been greatly welcomed from oil market participants following the ongoing sharp increases of crude oil inventories for the last 16th consecutive weeks.

Brent futures

COM5 Comdty (BRENT CRUDE FUTR  J 2015-05-06 16-48-32

European equity markets rebounded and posted renewed gains in today’s trading session, as risk appetite was high. The CAC, DAX, IBEX and London equity benchmark indices gained between 0.15% and 0.5%, while the euro surged above 1.13 against the US dollar, offering further support to the European indices.

EURUSD surges above 1.13

EUR Curncy (Euro Spot )  2015-05-06 16-47-38

We received fairly robust European economic which improved market sentiment. Germany’s Markit services PMI was reported at 54.0 in April, while Eurozone’s Markit services PMI increased to 54.1 in April compared to 53.7 in March. However, Eurozone’s retail sales declined -0.8% in March, missing analysts’ expectations of a 0.7% drop. In the UK, Markit services PMI surged to 59.5 in April beating analysts’ expectations of 58.5. Sterling extended gains for a second consecutive session and rallied towards 1.53 against the USD, despite that investors might remain a bit cautious ahead of the crucial UK elections tomorrow.

In the US, the macroeconomic picture looked a bit blurred. The nonfarm productivity dropped -1.9% in Q1 2015, in line with expectations, as labor costs increased by 5.0%. Furthermore, the US ADP employment report showed that US companies added 169,000 workers to payrolls in April, missing expectations of a 200K rise. Following the disappointing US economic data, the USD index remained under pressure and fell towards 94.0 against a basket of currencies. 

USD index

DXY Curncy (DOLLAR INDEX SPOT)   2015-05-06 16-46-33

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