Oil Rebounds from Lows

Daily Analysis - 15/03/2017

US Stockpiles Experience Surprise Drawdown According to API

Crude futures gained ground in early Asian trade, rebounding off the lows for the year after data reported by the American Petroleum Institute showed a surprise drawdown in US crude oil inventories last week.

Oil Bears Caught Off Guard

In a report delivered late on Tuesday by the American Petroleum Institute, US crude stockpiles dropped by 531,000 barrels last week, forcing oil bears to cover their shorts while sending prices higher. The API figure compared with the average analysts’ estimate of an increase of 3.700 million barrels for the period.

If the drawdown is confirmed by official US government data due later Wednesday, it would mark the first weekly drawdown after nine straight build-ups. Earlier on Tuesday, oil tumbled after OPEC reported a surge in global crude stocks amidst a surprise output jump in Saudi Arabia. OPEC's monthly report showed that oil stocks in industrialized countries rose to 278 million barrels in January, above the five-year average. Brent futures were last seen at $51.60 after ending last session down at $50.90 per barrel.

Singapore Unemployment Rises to 6-Year High

Although widely anticipated, Singaporean seasonally adjusted unemployment nudged higher to 2.20% during the fourth quarter of 2016, compared to the 2.10% pace recorded the prior two quarters. The reading matched preliminary estimates and marked the highest jobless rate since the fourth quarter of 2010. In the three months ending December 31, the unemployment rate for citizens went up to 3.50%, versus the 3.00% recorded a quarter earlier, while the rate for residents increased to 3.20% from 2.90% in the third quarter.

For full year 2016, unemployment increased by an average rate of 2.10% from 1.90% in 2015. It was the highest annual jobless rate since 2010 as the county continues to grapple with a slowdown facing the economy. USDSGD is currently trading around the 1.4135-mark following the release of the report.

Mexico Industrial Output Edges Higher

Despite the increased barbs being traded by the US and Mexico, industrial production in Mexico climbed modestly in January on a month-over-month basis, as output at manufacturers and mines grew. Production increased by 0.10% in January compared to December, with factory output growing by 0.50%, pushing the year-on-year manufacturing growth pace to 4.30%, up from 1.80% in December. Mining expanded by 1.10%, while utilities’ output declined by 2.00%.

This is the first sign that the recent deterioration in domestic business sentiment after the election of US President Donald Trump is not being borne out by hard data. On an annualized basis, industrial production fell -0.10% in January, versus a -0.60% drop reported during the previous month. USDMXN is largely flat on the session, trending around 19.646 in early trade.

New Zealand Current Account Deficit Narrows

Buoyed by higher overseas earnings and a booming tourism sector, New Zealand’s current account deficit narrowed to NZD 2.3 billion in the fourth quarter of 2016. The figure stood at NZD 2.8 billion during the same period last year. On a seasonally adjusted basis, the deficit dipped to NZD 1.6 billion, the smallest gap since March of 2014. Primary income deficit, composed mainly of investments, fell to NZD 2.0 billion for the three months ending on December 31^st. Secondary income posted a surplus - the first since the June quarter of 2015 - largely on the back of increased tax payments by non-residents.

By contrast, the goods deficit expanded to NZD 833 million as households and businesses consumed more imports, while exports continued to remain flat. After a steep retreat the last few weeks, NZDUSD is up in early Wednesday trade, last trending close to 0.6940.