Crude prices took a bounce in late afternoon Asian trade yesterday. While the price movement was not wide, the move was significant in the sense that the impetus for the move was a strong EU flash PMI number. In the last few months, crude has not had a bigger influence from demand-side indicators, with supply-side reports holding sway instead. Inventory updates and rig withdrawals have given traders direction for any short-term push. That was until today. This may be an important start for a firmer representation of an important low. Oil bulls hoping for further demand indications need not wait long, as the US is expected to release fourth quarter GDP numbers this Friday. A stronger-than-anticipated number could trigger further buying for oil, possibly bringing it back up to test the 20-day MA at around US$47.5, while a less-than-flattering growth number could also see another test of the US$43.5 support.

Overnight

Overnight action was mixed and indecisive across the board. Initially led up by strong EU and US flash PMI numbers, early gains in stocks were given back as the day progressed. USD - which started out weak - steadily strengthened, while the euro and resource dollars like AUD and NZD gave back some of their early gains. It remains to be seen whether we are going through a period of equilibrium - where bulls and bears even each other out - or simply a period where traders are happy to ride out the end of a good quarter by staying on the sidelines. US Durable Goods orders out tonight will offer the markets its next data point to trade off, followed by the big one this Friday with US Q4 GDP .
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