Crude oil prices rally strongly on lower US production

Wednesday, October 07, 2015

Crude oil prices rallied strongly yesterday with Brent front month futures climbing above $52 per barrel while WTI front month futures spiked above $49 per barrel. The Energy Information Administration (EIA) said in its monthly outlook that US crude oil production fell 120,000 barrels per day in September compared to a month earlier. The API weekly oil inventories report showed yesterday that US crude oil inventories have shrunk by 1.2 million barrels for the week ending 2nd October. The release of the weekly EIA report could provide clarification regarding the current levels of oil inventories this afternoon. This morning, WTI front month futures extended gains for a fourth consecutive session, eyeing the key $50 per barrel level.

Asian equity markets rallied strongly overnight as the Nikkei index gained 0.75% (135 points) and the Hang Seng index climbed over 2.3% (500 points) towards 22,350. The Bank of Japan kept monetary policy steady following increasing speculation that the recent signs of a recession could push the BoJ to act at the end of the month, as the next policy meeting is scheduled on 30th October. We have received fairly tepid Japanese economic data such as poor industrial production figures which confirm recent allegations that the country might have fallen back into a recession.

European equity markets rebounded in early trade this morning as the DAX, CAC, IBEX and London equity benchmark indices gained between 0.35% and 0.60%. The euro remained under renewed pressure this morning, falling towards 1.1220 against the USD, following disappointing European economic indicators. Germany’s industrial production declined unexpectedly by 1.2% m/m in August, missing analysts’ expectations of a 0.2% rise. Furthermore, Spain’s industrial output fell by 1.4% m/m in August versus expectations of a 0.4% drop.

Investors’ attention will turn to the release of UK’s industrial and manufacturing production for further direction. Sterling edged higher towards 1.5280 against the USD this morning, extending strong gains for a second consecutive session.

Brent front month futures rally towards $53/barrel    

 COX5 Comdty (BRENT CRUDE FUTR  N 2015-10-07 09-03-06

WTI front month futures climb towards $50/barrel

CLX5 Comdty (WTI CRUDE FUTURE  N 2015-10-07 09-02-45

Events for today:

0600

JP

Aug

Leading Index

0700

DE

Aug

Industrial Production

0930

UK

Aug

Industrial Production

1500

UK

Sep

NIESR GDP Estimate

1530

US

w/e

EIA Energy Stocks

2000

US

Aug

Consumer Credit

 

All times UK Local Time

Topics: Equities, USD, Asia, Crude oil, EUR, BoJ, GBP
More from: Myrto Sokou