Oil prices plunge $14 in two weeks to test $80/barrel

Wednesday, October 15, 2014

Crude oil prices plunged yesterday, as both Brent and WTI futures declined almost $4 in a very volatile and nervous trading session. Crude oil prices showed their biggest drop in more than two years. The oil fundamentals remain bearish while global oil demand is still very weak, following the recent disappointing macro data. The WTI front month contract has lost more than $5 in 2 days, heading towards the $80 per barrel level this morning, which holds as immediate support.  Brent front month futures extended losses this morning to retest $84 per barrel, triggering concerns about another volatile session in the market.

WTI front month futures plunge towards $80/barrel

CLX4 Comdty (WTI CRUDE FUTURE  N 2014-10-15 09-22-59

Brent front month futures decline below $85/barrel

CO1 Comdty (Generic 1st 'CO' Fut 2014-10-15 09-23-35

Asian equity markets rebounded strongly overnight, posting strong gains as risk appetite increased despite the mixed Chinese inflation data. The Nikkei index recovered recent losses and climbed higher 0.92% after gaining over 130 points. The Hang Seng index surged near 0.6% towards 23,200, as market sentiment improved in Asian markets. China’s consumer inflation slowed more than expected in September to reach nearly a 5-year low at 1.6% y/y compared to 2.0% y/y in August.

Germany’s CPI was unchanged at 0.0% m/m in September, as expected, while y/y the number remained stable at 0.8% in September, in line with analysts’ estimates. European equity markets opened the trading session lower this morning as the CAC, IBEX, AEX reported fresh losses while the London benchmark index slid lower towards 6350 in early trade due to limited risk appetite.

It is a very busy day on the macroeconomic front, with the main focus turning to the release of the US Beige Book details as well as NY Fed manufacturing, retail sales and core PPI data in September. The USD index edged higher this morning eyeing the 86.0 in early trade, verifying the recent strong upside momentum of the USD against a basket of currencies.     

 

Events for today:

 

0230

CN

Sep

CPI & PPI

0530

JP

Aug

Industrial Output

0700

DE

Sep

CPI & HICP

0930

UK

Sep

Claimant Count

1330

US

Oct

NY Fed Manufacturing

1330

US

Sep

Core PPI Final

1330

US

Sep

Retail Sales

1500

US

Aug

Business Inventories

1900

US

Oct

Fed Beige Book

 

All times UK Local Time

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