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Oil shows promising signs of recovery

Published Monday, February 9th, 2015

Unexpectedly good US non-farm payroll data ensure that next week worries about the timing of a US interest rate rise will join Greece and Ukraine as headline market issues, alongside Chinese stimulants, ECB QE, Iranian centrifuges and Libyan chaos. Employers created 257,000 new jobs in January and another 147,000 were added to the November and December numbers. The US has now turned in +200,000 for eleven consecutive months and, most important of all for the Federal Reserve decision making process, wages have started rising taking annual wage growth to +2.2%. Stock markets do not like interest rate rises but they do like evidence of economic strength leaving the S&P down 0.3% down on the day but 3.8% up on the week. Brent closed +$1.23 ( 57.80) and WTI +$1.21 (51.69).

We began last week wondering whether oil had found a bottom and we ended the week with the question still to be answered, but the signs are promising. There are some encouraging signs from the technical side that it may have done, but it only takes a poor close for technical gurus to change horses and ride in the opposite direction, yelling watch the support having been telling us just as vehemently to watch resistance in the previous 24 hours.

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Posted by David Hufton