From the CME:
The selling in the oil complex continued on Tuesday with WTI leading the
complex lower. However, after surprisingly large draws in refined
products in the API oil inventory report the market has turned the
corner and has been trading higher since late yesterday afternoon. The
market is in short covering rally ahead of today's EIA oil inventory
report. The market has been getting pummeled since most of the
commodities in the oil complex breached their range support levels on
Friday. The market was oversold coming into this week's round of
inventory reports and susceptible to some of the shorts heading to the
sidelines… which they are in the processing of doing in overnight
trading.
On the economic front UK industrial production increased
more than expected in September. Output increased by 0.9 percent from
August. This is a bit of a bright spot in what looks like an ongoing
dismal picture for all of the EU. The EU economy is still sluggish at
best and it has been directly impacting oil consumption in Europe. The
EU commission revised down it 2014 EU GDP projection to 1.1 percent. The
latest data out of the UK is positive but not something that suggests
all of Europe is ready for a growth spurt in oil consumption anytime
soon.
Global equity markets lost value over the last twenty four
hours. The EMI Global Equity Index declined by 0.31 percent resulting in
the year to date gain narrowing to 2.9 percent. Eight of the ten
bourses in the Index remain in positive territory for 2013 with only
China and Brazil still in the loser's column for the year. Equities have
been a negative price driver for the oil complex this week as market
participants await Friday's big economic event…US nonfarm payroll data.
In addition the US dollar seems to have put in a short term peak over
the last several trading sessions and is acting as a mild support for
the oil complex as well as the broader commodity markets.
The
investigation into the possibility of Brent price manipulation got a
bit more interesting as four former Nymex floor traders claim in a
lawsuit that the prices for buying and selling crude oil are fixed
according to an article in Bloomberg. The case, which follows at least
six other U.S. lawsuits alleging price-fixing in the Brent market,
provides what appears to be the most detailed description yet of the
alleged manipulations and lays out a possible road map for
investigators. Time will tell what the investigators will find and if
the lawsuits will be successful....MORE
Here's today's early action. While not exuberant we are trading up a buck from yesterday's lows, $94.06:
