Falling stockpile boosts oil, China data in focus | CMC Markets Daily Commentary
Crude oil prices moved higher overnight, backed by a softer dollar and a large draw in US commercial crude inventory over the week. Brent Oil price is trading at around US$ 67.5 this morning, close to its four-month high. Its immediate support and resistance level can be found at US$64.37 and US$68.15 (50% Fibonacci Retracement) respectively.
Overall trend for oil remains bullish as the SuperTrend (10, 2) is still in upward sloping since the indicator flipped from bearish downward sloping in early January. A gradual decline in North American oil rig count numbers and hopes on China to raise energy demand to fuel its infrastructure projects lifted the prospect of oil prices. Higher oil prices, alongside with a broad rally in US equities, could send Asian markets higher on Thursday at opening.
Boeing’s share prices recovered intraday losses and closed 0.46% higher after US President banned its troubled 737 Max series until further investigation results revealed to explain the two fatal accidents associated with the 737 Max 8 jet within five months. Boeing suffered its worst weekly performance in share prices since 2008 and faced a public trust crisis on its key products. It is not clear if the worst is over for the company,
Sterling had a choppy session this week on Brexit vote decisions. The UK MPs voted down Theresa May’s Brexit deal and then voted down a no-deal scenario. Now it seems that a delay of 29th Mar deadline is the only option on the table, and it could be either a ‘technical’ delay or a longer break and that is subjected to EU’s approval. Given the significant vote gap among the MPs this round, and EU’s firm stance on the current deal, the likelihood for significant amendments to be made for both sides to reach a common ground is diminishing.
Despite of uninspiring votes, sterling held firmly overnight, trading at 1.328 against the greenback and 1.172 against the euro.
Dollar index fell for a fourth day to the 96.5 area, sending commodity prices higher across the globe. Higher-than-expected U.S. durable goods orders and mild inflation data led the market to believe that the economy is in good shape and price pressure is not there. This is an ideal situation for equities to rise and the U.S. dollar to weaken.
Today, the markets focus will turn to China data, with Urban Investment, Industrial Production and Retail Sales growth due to be released at 10am Singapore time. Investors are looking for clues of a turnaround in macroeconomic metrics, following policymaker’s effort to boost growth via fiscal and monetary stimulus over the past few months.
Crude Oil Brent – Cash
China Retail Sales – YoY
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