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Markets lacking direction

Published Wednesday, February 26th, 2014

Markets failed to build on the momentum which took them to six-year highs as investors expressed concerns regarding the world’s second biggest economy. Risk appetite was undermined by suspicion of a possible intervention the by Chinese central bank which saw the yuan suffer its biggest daily drop in 2-years. The tentative mood was bolstered by figures showing that China’s corporate debt has hit record levels and raised expectations of an acceleration in the rate of debt restructuring and defaults.

Hopes for an injection of bullish sentiment now rested with the US but it ultimately failed to materialise. Housing data pointed to a slowdown in home price gains during December whilst a private sector sentiment survey revealed consumers were still cautious regarding economic growth prospects. The DJIA and S&P500 yo-yoed back and forth, eventually easing 0.2% and 0.1% respectively, and will be looking for a fresh source of impetus to take them beyond recent highs.

Another crude oil draw at Cushing

Yesterday’s negative sentiment in the financial markets spread over to the oil market as all contracts, bar Heating Oil, closed lower on the day. Heating Oil was supported by colder-than-usual weather forecast for the next 1-2 weeks in the US and settled 171 points up. WTI closed nearly $1/bbl lower despite another draw in Cushing stocks being expected. This draw duly happened, according to the API, which saw crude oil inventories at the NYMEX delivery points falling by 1.1 million bbls. The small draw in gasoline stocks failed to support RBOB that lost 255 points whilst Brent settled $1.13/bbl lower on the day.

 

Posted by Tamas Varga

Tamas Varga has been in the oil industry since 1992 and with PVM for 18 years. During his time in the industry he has gathered a range of experience in the oil markets. At PVM Tamas is in charge of data collection and analysis.