US Crude Logs Third Higher Close

Daily Analysis - 12/10/2017

OPEC Upgrades Global Demand Forecast


A lift in OPEC’s forecast for global crude oil demand saw US oil futures edge upwards to notch their third higher close in a row.  Futures for November delivery are holding ground above the key psychological mark of $50.00 a barrel in Thursday morning trade as an IEA report approaches alongside the official EIA inventory reading.

US Oil Stockpile Data in Focus

The Organization of the Petroleum Exporting Countries, in its monthly report, said crude oil production jumped by 90,000 barrels a day in September, complicating efforts by the group to curb the supply glut.

OPEC, however, raised its forecast for growth in global crude demand by approximately 30,000 barrels a day in 2018. The cartel is widely tipped to extend its production cuts beyond the March deadline to continue drawing down the excess build-up in stocks since 2014.

The one shocking admission was that crude prices were likely to remain in the range of $50.00-55.00 range for the foreseeable future.  In the meantime, the US Department of Energy’s official inventory data is scheduled for release later. The American Petroleum Institute reported an unexpected 3.10 million barrel stockpile gain during the week ended October 6th.

WTI futures are hovering just below $51.00 after pulling back from resistance overnight.


Wall Street Clocks Record Close

All three US stock benchmarks closed at record highs on Wednesday after minutes from the Federal Reserve's September policy meet signalled a desire to raise interest rates one more time this year despite stubbornly low inflation.

The markets were also lifted by continued speculation that Treasury Secretary Steven Mnuchin was pushing President Donald Trump to name the “market-friendly” Jerome Powell as the next Federal Reserve head.

Meanwhile, a report on job openings in the country showed a dip to 6.08 million in August from a record 6.14 million in July. Thursday will see the release of quarterly results from financial heavyweights JPMorgan and Citigroup, with analysts warning that earnings could be hurt by relatively low trading volumes compared to a year earlier.

S&P 500 futures ended Wednesday at 2552, with the index correcting marginally lower in early Thursday trade.


New Zealand Food Inflation Accelerates

A continued rise in butter prices saw New Zealand food inflation pickup in September, official figures released early Thursday showed. On a seasonally adjusted annual basis, the food price index climbed 3.00% last month according to Statistics New Zealand said.

Butter prices touched a record high, with the cheapest 500-gram block soaring 60.00% from a year earlier. Fruits and vegetables prices advanced 6.50%, while poultry and fish experienced a 1.40% cost increase.

Month-on-month, the food index gained 0.50%. Food prices account for roughly 19.00% of the consumer price index, which is the Reserve Bank of New Zealand's mandated inflation target when fixing interest rates.

With CPI due out next week, any progress towards 2.00% could lift the likelihood of gradual policy tightening down the road.

NZDUSD bounced further away from a four-month low hit last week to currently hover around the 0.7110-mark.


Turkey Current Account Deficit Narrows

Buoyed by an increase in the services surplus, Turkey’s current account deficit shrank more than forecast in August per figures published by the country’s Central Bank.

The deficit fell substantially to $1.20 billion in August from $5.10 billion in July, compared to expectations for a drop to $1.80 billion. The Central Bank of the Republic of Turkey remarked that the current account gap narrowing was led by a rise in the services surplus that posted a net inflow of $3.51 million in August.

The goods trade deficit contracted to $4.30 billion from $7.20 billion in July, while the balance on goods and services witnessed a shortfall of $0.76 billion. The Turkish Lira is recovering after tumbling earlier this week amid a visa spat with the United States.

The EURTRY pair was last seen around 4.3165 as the Lira gradually rebounds.


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