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PVM Midday Report 01 November 2013

Published Friday, November 1st, 2013

1.)   Japan growth slows in Q3

2.)   ECB policy easing bets cause Euro zone bonds to rise

3.)   Euro zone inflation eases through September

4.)   October exports boost UK manufacturing

 midday1

 

Fundamentals

Economy: The dollar strength continues after yesterday’s rally. According to the Economic Cycle Research Institute Eurozone inflation is likely to fall further in coming months. UK manufacturing index rose in October helped by the fastest growth in export orders for two years. European stock indices are down between 0.2% and 0.5% in the morning trading but slightly encouraging Chinese factory PMI is putting a floor under share prices. In the afternoon the ISM US manufacturing survey is likely to have an impact on the stock markets, especially in the US.

Oil: The weakening of the euro and the strengthening of the dollar is putting some downward pressure on oil prices this morning. After yesterday’s big fall the December/January Brent spread is stabilising and is currently trading at 23 cents/bbl, up 2 cents/bbl on the day. The recent consecutive builds in Cushing stocks and rising PADD3 crude oil inventories not only keep the front-month WTI spread in contango but the January contract also dipped below February. Iraq’s October oil exports stood at 2.253 mbpd, up from 2.07 mbpd in September, according to the oil ministry. ICE will launch 64 new contracts on November 18 including biodiesel, natural gas liquids and environmental products.

Technicals

The contracts are in trouble and faltering at the MA supports. WTI is already below all the short term (s/t) MAs supports and has a target lower to 04.82/76. The rest now look precarious. Brent has slid below the s/t MAs, which had looked like holding, and if it were to close below the lowest – the 8 – around 108.36 the it would acquire a target lower to 107.21 (100 day). Heat is below the s/t MAs but holding the key range support at 292.15. A close below here would be negative. RBOB has slid below the s/t MAs and now looks like heading towards 255.60. Even gasoil has now moved below the s/t MAs but needs a close below the 100 day 922.25 to start to look very vulnerable. The market is weak at the moment, but it’s the closes tonight that count. Closes back over the lowest s/t would point to the market holding.

Posted by Robin Bieber