Oil Captures 3-Week High on Supply Concerns

Daily Analysis - 30/03/2017

Libya Disruptions in Focus

Oil prices gained on Thursday, extending two consecutive sessions of growth as supply disruptions in Libya boosted the market. However, bloated U.S. crude stockpiles continue to cap the upside price of the commodity.

Brent, WTI Steady Despite Record Stockpiles

The gains made in the prior two days have taken the Brent well above the $50.00 per barrel mark, and lifted the WTI within touching distance of that level as well. Analysts attribute the recent rally to supply disruptions in Libya after the shutdown of pipelines from its biggest oil field.

Also supporting prices was a decline in U.S. gasoline inventories, which points to a tightening market despite record stocks of crude. U.S. gasoline inventories fell 3.7 million barrels in the week ended March 24, easily topping expectations of a 1.9 million barrel decrease, the U.S. Energy Information Administration said Wednesday. Crude stockpiles, however, rose 867,000 barrels to a record 534.0 million barrels. Brent June futures are up in early trade at $52.60, just below the strong resistance at $52.70 per barrel.

U.S. Pending Home Sales Jump to 10-Month High

Pending home sales in the U.S. soared to a 10-month high in February, ahead of the traditionally robust spring demand season, an industry group reported late Wednesday. The National Association of Realtors’ Pending Home Sales Index, which is derived from contracts signed in the previous month gained 5.50% to 112.3 after falling 2.80% in January.

This was the highest level in the index since April of last year. Economists reckon the latest data point suggests that higher prices and mortgage rates were failing to have any meaningful impact on the housing market, underscoring the resilience in the economy despite expectations that it had slowed during the first quarter. S&P 500 June futures are hovering just below key resistance at 2360.00 after rebounding from a one-month low earlier in the week.

U.K. Loan Approvals Decline in February

The Bank of England’s recent data showed the number of loans approved for home purchases dropping to 68,315 in February, versus 69,114 the previous month and below the median projection of 69,900 according to a Reuters poll. The outlook for consumer spending is critical as Prime Minister Theresa May begins two years of negotiations to take the country out of the European Union.

Consumers have kept up their spending post the shock June “Brexit” referendum, but signs that they are turning more wary have become increasingly visible. GBPUSD was last seen just above 1.24350.

Australia New Home Sales Rise

Sales of new homes in Australia edged higher in February amid stronger than expected growth in Western Australia and Victoria, an industry survey showed early Thursday. According to a survey of large-volume builders by the Housing Industry Association (HIA), new home sales grew at a seasonally adjusted pace of 0.20% in February from the month before. Sales of houses dropped 0.10%, while apartment sales surged 1.00% in the previous month.

The HIA expects housing starts to decline by around 2.00% in the financial year to June, hurt by data released in the past couple of months showing approvals to build new homes have decelerated from record highs. AUDUSD reversed from lows made earlier in the session, currently trading around the 0.76650 mark.