WTI breaks down below $35.00 on indications low prices may be here to stay
Despite encouraging economic news out of China, crude oil has been trading lower to start the week again, taking out its 2008 low near $35.00 and continuing to fall. The blame for today’s decline is being blamed on Iran, which has been ramping up production on anticipation of sanctions related to its nuclear program potentially being lifted next month.
Reports that Saudi Arabia is looking at slashing its government spending and the US is looking at lifting its export ban, meanwhile, indicate that major producers are hunkering down and preparing for what could be a very long battle over market share. This means that even though oil is technically oversold and could rebound, trading bounces may not be as large or as long as the ones we saw earlier this year.
Signs of improving economies in China (retail sales), Japan (Tankan Survey) and New Zealand (Service PMI) were seen as encouraging, helping Chinese indices to climb in Monday trading. Copper continued to decline, however dragging on Australian stocks.
Today finds US and European indices mixed near flat with traders still focused on Wednesday’s Fed meeting and regional elections in France which saw former President Sarkozy’s party apparently do well. In currency action, JPY and NZD are the top performers on their positive economic news, while GBP is a bit soft. Overall most majors are trading in a relative narrow range between 0.4% and (0.6%) relative to USD.
There have been no major corporate announcements so far this morning.
Significant announcements released overnight include:
China retail sales 11.2% vs street 11.1%
China industrial production 6.2% vs street 5.7%
China fixed assets 10.2% vs street 10.1%
China Bloomberg monthly GDP 6.85% vs previous 6.57%
Japan Tankan large mfg index 12 vs street 11
Japan Tankan large mfg outlook 11 vs street 7
Eurozone industrial production 1.9% vs street 1.4%
UK Rightmove house prices 7.4% vs previous 6.2%
NZ service PMI 59.8 vs previuos 56.2
Upcoming significant announcements include:
8:30 am EST Canada Teranet house prices street 5.5%
12:00 pm EST Canada Morneau speaking
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