Technical & Fundamental Oil Reports Specialists

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Don’t bank on a demand response

Published Wednesday, October 29th, 2014

Global stock markets enjoyed a rebound in risk appetite yesterday with solid corporate earnings and optimism over the conclusion of today’s FOMC meeting turning the mood firmly risk-on. Expectations are that the Fed is set to announce the ending of its massive programme of monthly asset purchases which has seen it add $4.5 trillion to its balance sheet. The predicted fall in liquidity on equity, bond and money markets is failing to undermine sentiment as hopes are that the guardians of US monetary policy will stress their commitment to keeping interest rates low for the foreseeable future.

The positive outlook surrounding the Fed policy meeting was supported by a gauge of US consumer confidence which hit a seven-year high in October. The feel-good factor exhibited by investors saw them shrugging off unexpectedly weak data which came in the form of falling US house prices and new orders for capital goods. With bulls dominating the action the three major stock indices on Wall St each closed over 1% higher.

It was a somnolent day in the shade for oil. Crude prices closed $1/bbl above their lows of the day at $86.03/bbl (+20) on Brent and $81.42 (+42) on WTI. Particular attention is being paid to the Dec/Jan WTI spread which closed unchanged at +30cts/bbl yesterday.

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Posted by David Hufton