Asia shares slide as US-China trade talks shelved

BANGKOK (AP) — Shares have fallen in Asia after China reportedly rebuffed a plan for talks with the U.S. on resolving their dispute over trade and technology. The slow start to the week followed a mixed close Friday on Wall Street, where an afternoon sell-off erased modest gains for the S&P 500 that had the benchmark index on track to eke out its own record high for much of the day.

 

ANALYST’S VIEWPOINT: “The weekend headlines have not been a blessing for ‘risk sentiment,’” Stephen Innes of OANDA said in a commentary. He added, “the optimist in me is siding on ‘this too shall pass,’ but with markets closed in Japan, China and South Korea as a large part of Asia celebrates the Mid-Autumn festival, it impossible to gauge sentiment in these drastically diminished liquidity conditions.”

 

Tampa Bay Times

A Cautious FOMC?? : dovish tail risks abound

US Federal Reserve chairman Jerome Powell is expected to reaffirm his cautious approach to monetary policy this week, potentially paving the way for an extended rally in the Australian dollar.

The Aussie has battled back from below US71¢ less than two weeks ago and is now within reach of US73¢, helped by a muted market response to the latest trade tariff moves by the US and China and the return of a semblance of calm to emerging markets.

With the economic party raging, the Federal Reserve is widely expected to drain some more punch from the bowl,” TD economist Leslie Preston said, adding the central bank appears far from done: “We expect the Fed to hike four more times over the next year, placing the fed funds target at a peak level of 3.25 per cent in 2019.”

The challenge for investors, as it is for Fed policymakers, is more nuanced.

“We suspect the FOMC will signal in its statement the need for policy, moving forward, to potentially become more nimble when it comes to rate hikes compared to the current workmanlike (quarterly) pace,” Bank of Montreal deputy chief economist Michael Gregory. “This could mean longer-than-one-meeting pauses or none at all (the latter becomes easier with the advent of pressers after each meeting next year).

“In any event, we suspect the phrase: ‘The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labour market conditions, and inflation near the Committee’s symmetric 2 per cent objective over the medium term’, might be modified.

The dot plot – or the specific rate forecasts by individual policymakers – is expected to be little changed for both 2019 and 2020.

“With two US rates hikes priced into [the balance of] 2018 and in the absence of inflation, it’s almost impossible for the Fed to bump up the 2019 curve,” OANDA’s Stephen Innes said in a weekend note.

“So, the markets will end up focusing on shifts in the long ball forecast into 2020 which is not the best or brightest of signals for currency traders who tend to view markets in much nearer time horizons,” Mr Innes said.

Australian Financial Review

By Stephen Innes Head of Trading Asia @steveinnes123

Bring on the FOMC!

EM Asia: Next weeks discussions

Please join me on Live on Monday, Sept 24  discussing cross-asset markets 

BFM Radio Kuala Lumpur  7:35 AM SGT  on the Market Watch

938Now 9:00 AM SGT for an extended view  on global markets

France 24 TV at 12:15 SGT for the European Open coverage

Jazz FM London 1:00 PM SGT discussing the Asia markets today

Bring on the FOMC !

FOMC 

The FOMC meeting next week has a hike fully priced in so the focus will be on the dot plots and the follow-up presser which has dollar bulls questioning their near-term positions.

The meeting will be overly scrutinised to see if there are any changes in the projections, with new Vice-chair Clarida voting for the first time. Also, Chair Powell will likely be quizzed on Fed Governor Lael Brainard view that US interest will probably need to be made more restrictive in the sense that at some point in the future if the unemployment rate remains low, policy rates should move above neutral and into the restrictive territory.

Dovish tail risk

And herein lies the dovish tail risk which has  USD Bulls erring on the side of caution. With 2 US rates hikes priced into  the rest of 2018 and in the absence of inflation, it’s almost impossible for the  Feds to bump up the 2019 curve. So, the markets will end up focusing on shifts in the longball forecast into 2020 which is not the best or brightest of signals for currency traders who tend to view markets in much nearer time horizons. Even if the Feds prod 2020 curve higher, its unclear how much of a USD fillip that shift could deliver given that Chair Jay Powell has contiued to de-emphasise 2020 dots. Unless we get an unexpected shift in the Feds terminal policy range of 2.75-3.00%, not sure the dollar ( X -JPY) goes anywhere but trades within well-worn ranges.

What else in G-10?

AS for the rest of G10, there will be no shift from RBNZ, but in the wake of the surprisingly strong data of late especially the monster GDP beat, we could see a subtle less dovish change in guidance.

It’s not a busy calendar next week per say but dotted by US PCE and EUR sentiment surveys. Canada delivers a GDP report, but NAFTA talks will continue to overshadow data as yet another NAFTA month-end deadline looms.

Brexit Blues 

It’s back to the Brexit drawing board after EU leaders “Chequers mated “and utterly humiliated May at the Salzburg meeting which sent the Pound tumbling below the 1.3100 before finding some composure. Of course, most believe a deal in some form or another will eventually happen. But in the nub of all this Brexit bluster, UK data has been surging with both CPI and Retail Sales beating expectations, but indeed  Brexit uncertainty has overshadowed.  Next week’s UK GDP data could be another strong point, however, with little to no breakthrough on Brexit likely to happen any time soon, The Bank of England will remain unwavering until clarity on Brexit it offered up so the market will likely look past next weeks UK data.

Great insights from our Senior Markets Analyst in London, Craig Erlam  

Sterling Down on May Brexit Warnings

OANDA Market Insights podcast (episode 32)

Craig reviews the week’s business and market news with Jazz FM Business Breakfast presenter Jonny Hart.

This week’s big stories: Sterling wobbles on Brexit fears, US/China tariffs tit for tat, Inflation hike against expectations.

China 

China PMI which will be closely monitored. Also, we should expect more trade headlines to come into play as both US and China tease with the idea of resurrecting trade talks.

USD Price Action 

Gauging this weeks price action in the wake of Trump tariff announcement, the markets overwhelming viewed the 10 % on 200 billion tariff levy and the measured responses from China as a smoke signal for further negotiation shortly. So the unwind of global USD hedges ensued as the market just found themselves far too long USD at not such grand levels. But the robust fundamental storyline in the US economy coupled with weak PMI data in Eurozone this week, I don’t think we’ve heard the last from the dollar bulls just yet.

Currencies in focus next week

EUR: a huge disappointment to the bulls with a close below 1.1750. While Fed forward guidance will drive the bus next week, the negative  EU PMI lean could hang like an anvil around the EURO neck.

CNH: It has to be on everyone’s radar especially after this weeks exodus of long USD hedge position on a combination of Trade war de-escalation, comments that mainland will not weaponise the Yuan as a tool in the trade war and offshore funding squeeze on the back Pboc to sell bills in Hong Kong. Despite the correction lower in USDCNH, given that China’s current account surplus is expected to shrink as a result of US tariffs and if the Feds signal clear dot plot sailing or even shift slight higher, CNH could sell off again.

Oil markets

Traders will pay close attention to Sunday headlines from Algiers as OPEC, and cooperating non-OPEC producers will meet on Sunday in Algeria

Likely seeking to appease President Trump, unnamed members of OPEC suggested they would discuss adding 500 K barrels per day, and while it gave cause to book some profit and reduce risk, its highly unlikely anything dealing with supplies will happen before the December 3 OPEC summit.

Despite wire reports suggestions otherwise, most of the oil traders in my circle, and despite the usual OPEC headline noise, think the meeting will be little more than the steering committee review of production and market data.

Please join me on Live on Monday discussing cross-asset markets 

BFM Radio Kuala Lumpur  7:35 AM SGT  on the Market Watch

938Now 9:00 AM SGT for an extended view  on global markets

France 24 TV at 12:15 SGT for the European Open coverage

Jazz FM London 1:00 PM SGT discussing the Asia markets today

 

 

 

 

ASEAN currencies edge higher

Sept 21 (Reuters) – Asian currencies strengthened for the
third consecutive day on Friday, supported by a weaker dollar
and shifting views over how much damage the Sino-U.S. trade war
will inflict on global demand and export-reliant regional
economies.

The dollar index has fallen more than 1 per cent this
week. Analysts said investment flows are being diverted away
from the greenback to its peers such as emerging market
currencies as trade tensions have ebbed.
“A significant factor in adding to the current run of dollar
weakness is the drop on safe-haven appeal after China suggested
they won’t weaponise yuan in a trade war,” said Stephen Innes,
head of trading for Asia-Pacific at OANDA in Singapore.
“Regional risk is very steady supported by thriving global
equity markets, a slightly weaker dollar and a positive glean
that North Korea’s leader Kim Jung-un has asked for a second
summit with President Trump.”

 

Reuters

The morning after

The morning after

US equity market has wholly shrugged off yesterday’s back and forth on US-China trade, as the robust US economy continues to sway investors. However, when we look back at the 2018 stock market run, a lot of ink will be spilt about the benefits of US repatriation flows which are keeping balance sheet flush which could  lead to   higher levels of capital spending, and in a low rates environment, should continue to support a more robust corporate earnings narrative.

While there’s a whole lot that can go upside down in US trade negotiations with  China, Europe and Canada and despite the market taking the bluster in stride, history tells us that tariffs are detrimental for global trade and commerce. As such the current levels of market buoyancy belie the possible groundswell that could overrun markets.

The bottom line why the market didn’t react negatively was the lack of shock and awe given the tariffs were so well telegraphed.

Oil Markets 

Oil prices remain supported despite a larger than expected build in the API US crude inventories report, but stocks at the Cushing, Oklahoma delivery point declined 1.6 million barrels according to the API.

Traders are ignoring today’s API data given while focusing on news from the middle east

Prices firmed when Russia pointed the finger at Israel when one of their reconnaissance planes was shot down, although it was later determined to be a  Syrian defence missle.  None the less any type of escalation in the middle east provided a fillip for oil prices.

But it was comments from Saudi oil officials that continues to resonate. It was only two weeks ago traders were assuming that OPEC was prepared to keep Brent trading between 70 and 80 per barrel. However, overnight chatter suggests that the Saudis are more than happy with a Brent price above $80 or that OPEC, more generally, is not considering raising output.

The September 23 OPEC+ meeting in Algiers turning into a significant affair with 20+ nation set to attend. It appears Saudis are putting their cards on the table ahead of the meeting and is currently being view through a bullish lens.

Gold Markets 

Continues to be driven by the USD, given the lack of clear direction overnight, the market continues to teeter-totter around the critical $1200 levels.

Currency Markets

JPY was the worst performing currency over the past 24 hours due to higher US yields and a more buoyant risk market, and of course, the Nikkei benefits through the weaker yen better for exports feedback loop.

Some focus on the BoJ meeting today. Expected to tow the line but forward guidance is the key after BoJ was discussing throughout the summer about tapering.

CAD was among the best-performing currencies globally on broader sentiment. Investors are waiting to restart conversations trader took the following in a very positive light House Majority Whip Steve Scalise stated. “While we would all like to see Canada remain part of this three-country coalition, there is not an unlimited amount of time for it to be part of this new agreement.”

AUD the return of global risk appetite has the Aussie bulls coming out of the woodwork. But with the A$ the main G-10 proxy to express China risk, I think the top side will be limited given the sheer volumes of headline risk.

MYR: Higher oil prices and a favourable risk environment should see the Ringgit trade more favourably, but the surge in US yields will temper trader’s expectations

Asia closing market notes : riding the risk rollercoaster

The markets are riding the risk roller coaster as headline overload has been dominating the Asian session.

First, the USTR tariff announcement had a bit more sting than expected due to the graduated settings 10 per cent now then up to 25 per cent in January on 200 bln. Which suggests the US is looking to talk but also not the President is not willing to cede the upper hand.

Then it was a matter of confusion reigns as CHINA SAYS COOPERATION IS ONLY RIGHT CHOICE FOR CHINA, followed by CHINA LIKELY WILL NOT SEND TRADE DELEGATION TO WASHINGTON, which tugged risk every which way but loose and left trader chasing their tail most of the session.

Frankly, I’m still surprised by the level of complacency, but then again, this escalation was so telegraphed suggesting today’s playbook could not have been scripted any better. But I’m keenly focused in USDCNH and China equities as the market’s composure surely belies the groundswell that’s yet to come.

Oil markets are in a tug of war as Iran sanctions will continue to provide near-term support, while discussions around global demand in the wake of this morning tariffs and speculation of further OPEC supply increases should temper upside ambitions. But in the absence of any OPEC supply shift, Iran and Venezuela shortfall should ultimately push prices higher, at least for the near term.

Gold continues to trade in tandem with the USD but, but with traders still debating the next USD direction we could remain in $1190- $1210 range.

ON the currency front, The Euro is showing a spring step but failed again at 1.1720. The August high 1.1730 remains critical while significant support should come in around 1.1620. Frankly, the EURUSD is where the near-term US dollar (X JPY) battle lines are forming.

Draghi has shifted less dovish, and fear index around Italian risk is easing., but we still have that unmistakably hawkish Fed here former dove like Lael Brainard continues to sound unmistakably hawkish every time she takes the podium.

Copper melts

MANILA, Sept 18 (Reuters) – London copper drifted lower for a third session running on Tuesday as China vowed to respond to the latest U.S. tariffs on about $200 billion of Chinese goods, exacerbating the trade war between the world’s two biggest economies.

In imposing the new tariffs, U.S. President Donald Trump warned that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”

China’s commerce ministry said the country has no choice but to retaliate against the fresh U.S. tariffs and hopes the United States would correct its behaviour.

“We know China can’t go tit for tat as they don’t have enough U.S. goods to tax,” said Stephen Innes, head of Asia Pacific trading at OANDA brokerage.

“So, if there is a more heavy-handed approach such as flat-out import restriction or overtly weakening the yuan, it could certainly bring the big market bears out of hibernation,” Innes said in a note to clients.

Commodities Weekly: Copper nears 15-month low as fresh tariffs announced

CNBC via Reuters

Seeing the forest for the trees

Seeing the forest for the trees

With trade war dominating the landscape, even more so after this morning’s US tariff headline, it’s easy to focus on markets from a one-dimensional perspective. But cross-asset trading is multidimensional and observing the more granular details can offer much-needed clarity in these difficult times.

US Markets

Certainly, Trade war worries are talking their tool on global equities with even the Teflon US markets showing some fraying at the edges. But today’s compass suggests trade-related global equity weakness is due to tech, as opposed to emerging markets or China. Apple, for example, does a booming bilateral business with China and with investors veering to the notion that recent weakness in U.S. tech is a result of administration earlier tariffs then a 200 billion wallop is being perceived particularly damning even for the remarkably resilient US heavyweights in the tech sector.

Ultimately equity markets remain in wait an see as big unknown remains Chinas response which will set the tone for risk sentiment. After all, much of this tariff headline was well telegraphed.

We know China can’t go tit for tat as they don’t have enough US goods to tax. So, if there is a more heavy-handed approach such as flat-out import restriction or overtly weakening the Yuan, it could certainly bring the big market bears out of hibernation.

With the US  implementing a graduated tariff hike, starting with 10 % on 200 billion and moving to 25 % at the start of 2019. The ball is clearly in China’s court. While the   US tariffs salvo is hardly middling, it’s not a bad as it could have been, so unless China hits with draconian measures, markets should remain supported after this morning knee-jerk reactions. Ultimately the graduated tariff hike allows more room to negotiate before the thumping 25 % levy gets triggered, so perhaps China may temper their response accordingly.

Smartwatches and Bluetooth devices were removed from the tariff list, suggesting the President is “watching” the market while taking the US heavyweight giants and US consumer under consideration.

Oil Prices
Iran sanctions will continue to provide near-term support, while discussions around global demand in the wake of this morning tariffs and speculation of further OPEC supply increases should temper upside ambitions.

Oil futures posted a minor loss on Monday. After finding some support from potential global supply losses among various OPEC countries (Iran and Venezuela). But prices eventually gave way and are tracking the CRB index lower pressured on the prospects that US tariff will negatively impact global demand.

Also, Washington continues to suggest that Saudi Arabia, Russia and the United States can raise output fast enough to offset falling supplies from Iran.

The September 23 OPEC+ meeting in Algiers is taking on a bit of life of a life of its own as what was initially thought to be a be a fundamental review of production data by OPEC’s steering committee has now turned into 20+ nation affair. Suggesting everyone wants a seat at the table most likely to discuss the supply disruption from Iranian sanctions, which is leading to speculation that further production increases will be presented at the meeting.

Gold Markets

Another case of rinse and repeat
A modestly weaker dollar and aggressive short-covering pushed gold above the $1200 teeter-totter level, this despite a more hawkish lean from Fed-speak last week. Besides, haven buyers continued showing some bravado felling more confident buying gold when the dollar is fading which is provided with a subtle tailwind for prices overnight as investors brace for possible more massive tariffs than what’s currently priced into the markets. But price action remains entirely dollar driven. So, what the dollar giveth the dollar taketh as USD haven demand is back in vogue post-trade announcement.

Further risk response will be dependant on China response.

Currency Markets

I am challenged not dollar bullish from a pragmatic US interest rate storyline. But of course, price action needs to be respected especially with the EUR veering towards 1.1700 again. The strong US economy suggests USD yields have further room to run. And when former doves like Fed Governor Lael Brainard, who I dare say, is starting to roost with the Hawks, it’s giving clear signals that this sitting Fed is more hawkish than the markets 2019 rates lean.

The Chinese Yaun 

The primary trade war currency hedge is back in play with USDCNH moving above 6.89 as the market awaits Chinas response. But seller should emerge given how quick the market response has been to take USDCNH higher and the uncertainty over Pboc’s next move.

Euro

With Trade ware dominating headlines early Monday morning it’s easy to overlook some basics shift in EU zone fear index with European Bank Index and CDS curve suggesting Italy’s risk premium is getting priced out the equation. Even Turkey, despite another currency wobble yesterday, is stabilising somewhat on the recent astonishing CBT rate hike. The diminishing fear factors could push Bund higher and provide support for the Euro.

Australian Dollar

The Australian Dollar has weakened on the 20 pips on the tariff news in consort with USDCNH moving higher as the Aussie will remain a G-10 proxy for China risk, so it’s susceptible to more headline wobbles in coming days especially China response which could be extremely crucial for risk sentiment. But so far, the Aussie reaction is pretty much following the tariff playbook.

We do have the RBA, but I suspect its unlikely to alter today’s negative Aussie lean.

Japanese Yen
Risk has wobbled on the Trade headline triggering some modest haven moves to the Yen. But volumes are light, as frankly market at his stage are not panicking as the bulk of this tariff headline was already factored.

Canadian Dollar

The Lonnie is sagging, but this is possibly more about positioning as the markets found themselves short around the 1.3000, and with the CAD $ Perma -bears failing to yield that level,  the tariff headlines have triggered more short covering. But moves toward towards 1.3100 will likely be faded as NAFTA discussion are still going on.

Malaysian Ringgit

The recent support for EM central banks (Russian, Turkey and India) is buffeting the EM complex.
The 200 billion in tariffs, while negative for regional sentiment, is not as impactful for the Ringgit as the currency remains relatively insulated due to domestic oil exports and improved term s of trade. But higher US interest rates do pose some significant concerns, especially if a more hawkish fed vs a more dovish BNM does come to fruition.

Super Thursday, indeed

Super Thursday, indeed

Super Thursday for some but a Topsy-Turvy one for others. Of course, much of that had to do with what side of the US dollar coin you were on.

Hope springs eternal for emerging markets anytime the US dollar weakens and yesterday was no exception. As indeed the stars aligned for emerging markets (EM) assets after an astonishing interest rate hike from the Central Bank of Turkey (CBT) of 625bp and an exceedingly soft US CPI data. And for beleaguered emerging markets, the timing could not have been any better as traders were coiled and ready to strike after the past fortnights of intense EM  bloodletting. Meanwhile, the BoE meeting proved a total non-event but the ECB, more constructive.

Not surprising, interbank EM currency volumes surged as a solidarity rally by proxy ensued, much to the relief of just about everyone quite frankly, as
US stocks pushed higher with the technology sector rebounding as participants took a more calming view of the US-China trade dispute while emerging market assets rallied on the weaker US dollar which supported a very bubbly risk environment.

Indeed, we could see this “risk on”shift that was set in play in early Asia yesterday extend throughout today’s APAC session. Mind you, chasing short covering rally can be fraught with danger.

With that in mind, let me do my best spoil the party by suggesting that much of this rally will depend on what level of diplomacy that can be reached from the US-China talks and if  President Trump is willing to fold a strong hand and not impose 200 billion in tariffs? But failing any progress on these fronts, the Pboc will be less incentivised to keep the RMB complex in check, and we could be in for another EM fracas if the Pboc guides the Yuan incredibly cheaper. And of course, there that small matter about rising US yields which generally sounds the death knell for EM currencies, but let’s leave that one alone until next week.

Oil Markets

Topsy Turvey Thursday indeed!!

Oil futures markets gave back Wednesday’s gains, but there must be more to it than a realisation that last weeks inventory reports included a significant increase in product inventories that more than offset the US crude inventory draws. That’s second nature for the Willey oil trading community, so the issue does run deeper Specifically, those same Willey veterans latched on to International Energy Agency report which indicated daily crude-oil output in the Organization of the Petroleum Exporting Countries climbed in August by 420,000 barrels a day, to average 32.63 million a day.

So, while the anticipated production drought from Venezuela and Iran could be an issue in the future, it’s not an imminent one as OPEC total crude production came in the right on top of estimates and triggered a bearish correction on both WTI and Brent prompt contracts.

So, in a nutshell, the market came off aggressively as Crude Oil supplies are not tight, well not yet anyway. But when you look at in the context that EM countries crude demands are at risk from an economic slowdown( tariff impact) coupled with the sturdy supply report, there are some concerns that increases from OPEC and non-OPEC producers can offset the Iran sanction concerns.

Gold Markets

A convincing snap in the  XAU-DXY  correlation overnight suggesting that the de-escalation in US-Sino trade dispute is having a calming effect on overall risk, and despite the dollar trading considerably weaker after the soft US CPI data, the tight correlation snapped.

Of course, from a hedger perspective, the focus has been on US equities as opposed to the US dollar so with global equities back on the boil there is little demand for gold in general. At the heart of the matter, ETF flows remain stagnant, and gold continues to be little more than a dead money trade at this point.

But the enormous tail-risk remains in play as when dollar strength return sand that tight XAU-DXY  correlation will come back with a vengeance with a high degree of certainty.

Currency Markets

Oh my, what a carry!!

The CBT set the one-week repo to an astonishing 24%! (+625bps) And that sigh of relief you heard out of Japan, was from Tokyo’s fervent carry traders who now have 24% annualised wiggle room to manoeuvre. We did see more TRYJPY buying this week than average, so there will be more than a few happy Japanese investors this morning especially after being nearly toppled when USDTRY rose more than three per cent yesterdy on President Erdogan who was bizarrely advocating for a rate cut.

And as expected on this decisive policy shift, it has triggered concurrent relief rally across EM.

EURO
Draghi was steady on headline inflation but a tweak in the core which is easily interpreted in the less dovish context that the ECB does expect inflation to concenter at its target as monetary accommodation is reduced at the fringe. A bit of a tough pill to swallow for EUR bears but, price action must be respected, and with US CPI providing little relief for the nascent dollar correction, I suspect the EUR bears will remain sidelined until more definitive signals emerge.

Australian Dollar
Price action was telling as indeed short position was much cleaner after the yesterday’s short Aussie squeeze, so we didn’t get that outsized reaction on positive EM development nor the weaker US CPI print that many had expected. But since we get to do this all over again next week, “Prudence”, suggests its time for the sidelines and to fight another day.

Malaysian Ringgit

Regional risk should trade positively today, suggesting the MYR will be mildly supported, but with Oil prices falling overnight, it will likely balance out the EM solidarity knock-on effect from the astonishing 625 bps CBT rate hike, so we could expect the MYR to trade neutral bias given the mixed signals.

A bullish confluence in oil markets

SINGAPORE (Reuters) – Oil prices slipped on Thursday, although U.S. crude remained above $70 a barrel on the back of falling crude inventories and Brent was still close to $80 because of looming sanctions against Iran.

Brent rose above $80 per barrel the previous session for the first time since May, spurred by expectations that U.S. sanctions against Iran’s oil exports, which will start in November, will tighten global markets.

U.S. crude inventories C-STK-T-EIA fell 5.3 million barrels in the week to Sept. 7 to 396.2 million barrels, the lowest since February 2015 and about 3 per cent below the five-year average for this time of year, the U.S. Energy Information Administration (EIA) said in its weekly report on Wednesday.

Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said crude inventory data for last week showed “a much deeper drop than analyst’s expectations … propelling Brent briefly above the fundamental and psychological $80 a barrel for the first time since May, and was equally as supportive for the WTI contract.”

U.S. crude oil production C-OUT-T-EIA fell by 100,000 barrels per day (bpd), to 10.9 million bpd.

Innes said the slight dips on Thursday came as rising refined product inventories, which the EIA also reported, “slightly dampened market overexuberance” as it indicated that U.S. fuel demand may be weakening.

Overall, however, Innes said “the confluence of bullish near-term signals (of) Iran sanctions and sinking U.S. crude inventories should keep oil prices supported for the remainder of the week.”

 

Reuters