Technical & Fundamental Oil Reports Specialists

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US drowning in oil

Published Friday, October 16th, 2015

US core inflation rose by 1.9% in September and new applications for unemployment benefits fell to a 42-year low of 255,000. These are very positive signs that the Fed is very close to meeting its two key mandates on inflation and employment and therefore on course to increase interest rates by the end of the year. On the other hand both US and Chinese producer prices are falling, threatening to dilute inflation in the coming months.

This potential dilution, comments in the Fed’s Beige Book referring to “generally sluggish” manufacturing conditions and poor numbers from the Empire and Fed Philly indices, give reason for the Fed to delay and increase into next year. As opinion ebbs and flows on when the Fed will move so do stock markets and the dollar. Yesterday was an up day on both. It may be different today and even more so on Monday when a big data batch appears from China including a 3Q GDP growth number.

The oil market had a delayed set of EIA stock figures to absorb and a November Brent expiry to deal with. The expiry was dull with a low level of open interest going into the day. November Brent settled -44cts/bbl at $48.71 with December +4cts/bbl at $49.73. November WTI lost 26 cts/bbl to close at $46.38/bbl. The new front month Brent spread (Dec/Jan) settled at -66cts/bbl.

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Posted by David Hufton