he big action today has been in crude oil markets which saw their recent rally come to an abrupt end with WTI falling 5% back toward $50.00 and brent taking nearly a 3% hit. Oil has rebounded in a bear market rally recently on speculation that falling capital and exploration spending would but in to US production.
Today, however, the International Energy Agency crushed those hopes forecasting that US production would grow at a slower pace than before, but still grow and be significantly higher five years from now.
Overall, it appears that crude oil appears to be moving into a $45 to $55 or $60 trading range but could still be quite volatile with the market share war among suppliers continuing. The impact on service companies and employment in the oil patch became even clearer today as Halliburton announced plans to lay off 6.5%-8.0% of its employees.
Natural gas, on the other hand, rallied on forecasts for colder temperatures in the Northeast consuming region both in the near term and also through to late March, suggesting spring could arrive late this year and keep heating demand higher for longer.
The drop in crude oil didn’t help the loonie today, but it took an even bigger hit following comments from Bank of Canada Deputy Governor Wilkins who left the door open to additional interest rate cuts if required to support the Canadian economy. Meanwhile San Francisco Fed President Williams joined the parade of FOMC members indicating this week they are still looking at a mid-year liftoff to US interest rates and gradual increases.
Stock markets around the world continue their seesaw trading, bouncing back Tuesday from declines Monday. Focus remains firmly on Greece ahead of tomorrow’s meeting between the country’s new government and the EU over its debt problems. Rumours of compromise helped to boost stocks and reduced fears of an immediate unplanned Grexit from the Eurozone for now, knocking the Greek treasury yield back under 10%. This also encouraged capital to move back out of defensive havens, sending gold, JPY and CHF lower on the day.
It’s another relatively quiet day for news but things should pick up Wednesday through the end of the week with meetings scheduled related to both Greece and Ukraine, while weekly US oil inventories could keep the pot boiling in energy markets.
Tesla Motors Aftermarket reports emerged indicating that Tesla only sold 120 cars in China during Q4 way below expectations due to misconceptions about charging Reports also suggest a management shakeup for the China business could be on the way.
First Solar Has received a $848 million commitment from Apple to purchase power over 25 years from a solar project the company is developing in California
Significant announcements released overnight include:
France industrial production (0.1%) vs street (1.3%)
Norway consumer prices 2.0% vs street 1.9%
Italy industrial production 0.1% vs street (0.7%)
UK industrial production 0.5% as expected
UK manufacturing prodn 2.4% vs street 2.0%
Upcoming significant announcements include:
9:30 am AEDT Australia consumer confidence previous 93.2
TBA China new loans street $1.350B
7:00 am GMT Sweden unemployment rate street 4.4%
9:00 am GMT Norway GDP street 0.6%
10:30 am EST US crude oil inventories street 3.75 mmbbls
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