Crude oil prices reversed and retreated sharply in today’s trading session as investors remained cautious and were prompted to a heavy sell-off following the disappointing US economic data and the stronger US dollar. The weekly EIA oil inventories report was fairly bearish after showing another large build of 6.3 million barrels for the week ending 30th January, adding further pressure to an already bearish oil market. WTI front month futures plunged over 5% to retest $50 per barrel, giving back recent gains, while Brent front month futures retreated sharply over $2 towards $55 per barrel.
On the macroeconomic front, we continue to receive fairly tepid US economic data, while the main focus remains on the release of the non-farm payroll figures on Friday. Today, following the ADP employment report, the US economy added 213,000 jobs in January compared to 241,000 in December missing analysts’ expectations of 223,000. However, the Markit services PMI was reported fairly strong at 54.2 in January from 54.0 in December. Germany’s Markit services PMI climbed to 54.0 in January and Eurozone’s retail sales rose 0.3% in December, both figures beating analysts’ estimates.
The euro came under renewed pressure to retest 1.14 against the dollar as investors remained cautious regarding the ongoing discussions of Greek prime minister with the other European leaders and the ECB. European equity markets retreated lower with the CAC, DAX, IBEX and the London equity benchmark index falling between 0.25% and 0.9%.
Precious metal prices remained in positive territory with gold trading around $1260/ounce and silver gaining to retest $17.50. Platinum and palladium also extended gains in today’s session.