Crude oil prices surged 4.5% overnight, as the market cheered Saudi Arabia’s commitment to cut production by 1 million barrels a day from next month – an effort aimed to ease glut concerns amid increasing production in North America. 

Meanwhile, the American Petroleum Institute reported a huge, 10.2-million-barrel drop in US crude inventory, compared to estimates of a decrease of 2.6 million barrels. This signalled a further reduction of US stockpiles, which fell from 536 million barrels at the end of March to 487 million barrels. The WTI crude oil price surged to the $48.2 area this morning.

The US dollar index is holding its ground around the 93.9 area ahead of the FOMC meeting tonight. The interest rate decision will be released at 2am Singapore time. The market expects a near-zero probability of a rate hike this time, but the central bank’s policy outlook will be closely watched by market participants nonetheless. 

US equities advanced further on upbeat earnings and a surge in oil prices. The Dow Jones climbed nearly half a percent to 21,613 points, and the S&P 500 finished at a record high. The risk-on sentiment prevailed, resulting in a big sell-off in treasuries and the Japanese yen last night. 

Singapore

In Singapore, the Straits Times Index climbed 17 points yesterday, led by banks and consumer names. The surging oil price will likely benefit Singapore’s oil and gas names such as Sembcorp Marine, KrisEnergy and Ezion today. Earnings from OCBC, UOB, SIA, SGX and Jardine C&C will be key drivers of the STI in the days to come. 

Technical analysis:

Crude Oil West Texas - Cash

  • 10-Day Simple Moving Average is sloped upwards
  • SuperTrend (10,1.5) also sloped upwards
  • Broken out above the 50% Fibonacci retracement level at 47.40, which serves as an immediate support level
  • Facing some resistance at the 38.2% Fibonacci extension level at 48.40, which serves as an immediate resistance level
  • MACD continuing to trend up, indicating strong upward momentum

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