Prices of the barrel of the American reference for the sweet light crude oil extended the rally on Wednesday, briefly breaking above the key $55.00 mark and flirting with YTD tops near $55.30.
WTI closer to 2017 peaks
Prices for the WTI rose further today after the EIA reported crude oil supplies decreased by 2.435 million barrels during the week ended on October 27.
Further data saw weekly distillates stocks down by 0.320 million barrels and gasoline inventories decreasing by 4.020 million barrels.
Additionally, supplies at Cushing rose by 0.090 million barrels.
The auspicious EIA report added to the already upbeat sentiment surrounding crude oil prices after the OPEC noted the compliance with the output cut deal remains strong, while expectations of a probable extension of the agreement beyond March 2018 keeps underpinning the bullish stance in prices.
Levels
At the moment the barrel of WTI is up 0.66% at $54.74 facing the next hurdle at $55.22 (high Nov.1) seconded by $55.24 (2017 high Jan.3) and finally $56.51 (low May 28 2015). On the flip side, a breach of $53.78 (23.6% Fibo of $45.58-$55.22) would open the door $52.91 (10-day sma) and then $51.85 (21-day sma).
Wednesday, November 01, 2017
US - Vehicle sales to post
“On a strong jump in demand for replacement vehicles after hurricanes swept through the Texas and Florida, the sales in September reached a pace of 18.5mn, the highest since July 2005. While fleet sales appear to have been strong, sales at auto dealers increased solidly as well. Although we think that this sharp increase is likely transitory, we expect to see residual demand for replacement vehicles in October. Further, incentive spending appears to have been aggressive in the month as automakers strive to clear out inventories of older models.”
Analysts at Nomura think that US total light vehicle sales will come in at a strong pace of 17.5mn saar.
Analysts at Nomura think that US total light vehicle sales will come in at a strong pace of 17.5mn saar.
USA - Who will lead the Fed
“President Donald Trump is expected to announce his decision on Thursday and is said to be leaving towards Fed Governor Powell. However, Trump is known for changing his mind with other potential candidates including Stanford University Economist Taylor, former Fed Governor Warsh and current Chair Yellen. If Trump opts for Taylor or Warsh, we are likely to see the US dollar firming and US bond yields rising sharply, at least initially, as the markets will start pricing in higher interest rates.”
“It is not only about the next Fed chair. President Trump could have a major impact on the Fed’s course in coming years as he is nominating a new Fed Chair, Vice Chair, and most of the Board of Governors. This amount of Fed appointments by a single President is extraordinary and not by design. However, the high turnover in the Board of Governors has made it possible. This allows President Trump to align the Fed’s policies with his own economic agenda. After the extreme makeover, we are likely to see the Fed support Trump’s efforts at deregulation. What’s more, Trump can choose whether he wants monetary policy to be hawkish or dovish in the coming years, according to Philip.”
“It is not only about the next Fed chair. President Trump could have a major impact on the Fed’s course in coming years as he is nominating a new Fed Chair, Vice Chair, and most of the Board of Governors. This amount of Fed appointments by a single President is extraordinary and not by design. However, the high turnover in the Board of Governors has made it possible. This allows President Trump to align the Fed’s policies with his own economic agenda. After the extreme makeover, we are likely to see the Fed support Trump’s efforts at deregulation. What’s more, Trump can choose whether he wants monetary policy to be hawkish or dovish in the coming years, according to Philip.”
UK: Manufacturing PMI
Analysts at TDS are looking for the UK manufacturing PMI to remain unchanged at 55.9 in October, in line with consensus.
“While we saw a surprisingly large decline last month, the details weren’t all that back with key components like domestic and export orders and employment still holding up well. The key concern seemed to be around higher input prices, which continue to squeeze manufacturers’ margins.”
“While we saw a surprisingly large decline last month, the details weren’t all that back with key components like domestic and export orders and employment still holding up well. The key concern seemed to be around higher input prices, which continue to squeeze manufacturers’ margins.”
EUR/USD bounces back towards 1.1650
The EUR/USD pair is seen making minor recovery attempts on 1.16 handle, as we progress towards the European opening bells, with the broad-based USD recovery seen faltering once again near 94.60 levels.
EUR/USD: FOMC in spotlight
The spot reversed most losses, having found fresh bids at Tuesday’s low of 1.1625 levels, as the European traders resume covering their ECB decision-driven EUR shorts heading towards the key risk event for today, the FOMC policy outcome.
More so, fresh selling seen in the US dollar across its main competitors, despite strengthening Treasury yields, also collaborate the rebound seen in the EUR/USD pair. The USD index eases back below 94.50 levels, almost unchanged on the day.
However, further recovery in EUR/USD appears limited, as the demand for the greenback could return to markets on a hawkish Fed statement, with the Dec rate hike already price-in by the markets.
In the meantime, the pair will get influenced by the sentiment on the European stocks and US dataset slated for release later on Wednesday.
EUR/USD: FOMC in spotlight
The spot reversed most losses, having found fresh bids at Tuesday’s low of 1.1625 levels, as the European traders resume covering their ECB decision-driven EUR shorts heading towards the key risk event for today, the FOMC policy outcome.
More so, fresh selling seen in the US dollar across its main competitors, despite strengthening Treasury yields, also collaborate the rebound seen in the EUR/USD pair. The USD index eases back below 94.50 levels, almost unchanged on the day.
However, further recovery in EUR/USD appears limited, as the demand for the greenback could return to markets on a hawkish Fed statement, with the Dec rate hike already price-in by the markets.
In the meantime, the pair will get influenced by the sentiment on the European stocks and US dataset slated for release later on Wednesday.
FOMC plans to keep raising interest rates
“Chair Yellen and the Committee have very clearly highlighted an intention to continue gradually tightening policy, with the next move to come before year-end (i.e. at the December meeting). The market has since responded, almost fully pricing in a December hike. The November meeting will therefore simply confirm an impending move.”
“At this juncture, the focus of markets is instead on who will be the next FOMC Chair. A decision is expected to come from President Trump by the end of next week. If the market rumours are to be believed, then Jerome Powell and John Taylor are in prime position. Both could be seen as more hawkish than Chair Yellen. Hence, on announcement, there may be a shift in market rate expectations for 2018.”
“At this juncture, the focus of markets is instead on who will be the next FOMC Chair. A decision is expected to come from President Trump by the end of next week. If the market rumours are to be believed, then Jerome Powell and John Taylor are in prime position. Both could be seen as more hawkish than Chair Yellen. Hence, on announcement, there may be a shift in market rate expectations for 2018.”
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