Crude Holds on to Gains

Daily Analysis - 28/09/2017

US Oil Stockpiles Unexpectedly Decline

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Oil futures nudged higher on Wednesday after U.S. government data showed an unexpected dip in crude inventories. However, the gains were kept in check amid a rise in gasoline inventories for the first time in four weeks as production levels continued to recover, reaching 9.064 million barrels per day in the lower 48 US states.

Oil Futures Remains Stuck in a Range


The US Energy Information Administration weekly stockpile report unveiled on Wednesday showed that domestic crude supplies declined by 1.846 million barrels during the week ended September 22, after recording hefty rises in each of the prior three weeks. The fall in stocks was contrary to a consensus forecast for addition of 1.300 million barrels in a survey of analysts by S&P Global Platts.

Gasoline inventories gained 1.107 million barrels during the period after three consecutive weeks of drawdowns, while distillate stocks fell by a reported 800,000 barrels. US Crude futures for November delivery have been stuck within a narrow trading range for the past few sessions with $52.50 per barrel representing the immediate upside resistance. A daily close above that zone could see fresh buyers enter the market, pushing momentum higher.

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US Dollar Lifted by Fiscal Hopes


The US dollar touched a six-week high against the Swiss Franc on Wednesday, buoyed by investor optimism that President Donald Trump's Administration might be finally making some concrete progress on fiscal reforms. Trump yesterday unveiled the first major US tax revamp in a generation that proposes to slash taxes for most Americans while simplifying the existing tax code and making it fairer. USDCHF hit an intra-session high of 0.9770 following the announcement.

The greenback was also lifted by upbeat data on durable goods orders. On a monthly basis, orders for long-lasting goods climbed 1.70% in August according to data compiled by the Commerce Department. Economists surveyed by The Wall Street Journal had projected a 1.00% gain for the period. Core capital goods orders, a key measure of business investment, edged 0.90% higher, rising for the eighth time in the previous nine months.

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New Zealand Holds Rates at Record Low


After a significant period of record low interest rates, New Zealand's Central Bank left the benchmark rate unchanged, just days following a general election that could bring about a change in the bank's policy mandate. The Reserve Bank of New Zealand, in its first monetary policy meet under interim Governor Grant Spencer, kept the cash rate steady at a record low of 1.75%.

Furthermore, the Monetary Policy Committee indicated that it does not expect to tighten policy for some time as the country’s growth outlook weakens and headline inflation slows. While the economy managed to record a modest rebound during the second quarter after six months of anaemic growth, inflation flattened on a quarterly basis. The New Zealand dollar was trading lower following the Central Bank’s decision, with AUDNZD last seen around 1.0870.

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French Consumer Sentiment Weakens


Consumer attitudes in France unexpectedly softened in September per data aggregated by the statistical office INSEE. The consumer confidence index slipped to 101 this month from 103 in August. Apart from the figure reaching the lowest point since April, it marked the third straight monthly decline.

Households were less optimistic about their financial future, with the sub-index for future financial situation coming in at -11 versus -9 in August. The gauge of households' opinion on past financial situation also worsened in September after remaining stable in August. The drop-in consumer sentiment comes just days after recently elected President Emmanuel Macron signed in to law a series of labour reforms that have been met with a mixed response. In the meantime, CAC 40 futures are trending slightly lower after ending Wednesday’s session at 5279.00.

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