Originally published by Rivkin Securities
Oil prices gained on Thursday following US crude oil inventory data that showed stockpiles increased less than anticipated. Crude oil inventories increased by 564,000 barrels opposed to the 3.385 million estimated with both WTI and Brent crude oil gaining +1.4% & +1.11% respectively. The first chart below highlights both of these prices, having remained within a tight range of $5 since December highlighting the delicate balance between OPEC supply cuts and rising U.S. production. Despite record compliance by OPEC members of 93% prices have been unable to break out of this range, showing that the market remains well supplied.
The US dollar index declined -0.21% as a result of a +0.21% gain in the euro as Emmanuel Macron expanded his lead in polls for the French presidential election. French yields declined with both the two and ten year yields falling -4.6 and -6.7 basis points respectively. Still German yields pushed to new record lows after ECB policy makers signalled they were in no rush to remove stimulus following initial signs of momentum for the Eurozone economy. In Germany the government surplus rose to 23.7 billion euros and GDP (YoY Q4) was in line with forecasts at 1.7%.
Equities saw some profit taking last night, in Europe the Euro Stoxx 600 traded -0.14% lower, as did the DAX down -0.42% and FTSE100 -0.42%. The US was mixed, with the Nasdaq 100 down -0.37% while the S&P 500 recovered initial declines to close modestly in positive territory, up +0.04% driven by gains in the energy sector following higher oil prices.
Locally the Australian dollar was +0.09% higher at the time of writing following a larger than expected decrease in capital expenditure for the fourth quarter of 2016. Spending by private companies decreased -2.1% with forecasts for only -0.5%. Declines were driven primarily by falls in mining investment with the trend estimate falling -8.1% for the quarter. The S&P/ASX 200 finished -0.35% lower and we look set to open trade on a slightly weaker note this morning with ASX SPI200 futures down 9 points in overnight trade.
Data releases:
· RBA Governor Lowe to Testify Before Parliament Committee 9:30am AEDT
· Canadian CPI (MoM & YoY Jan) 12:30am AEDT
· U.S. New Home Sales (MoM Jan) 2:00am AEDT
· University of Michigan Confidence Survey (MoM Feb) 2:00am AEDT
Chart 1 – Brent (Blue) and WTI (Purple) Crude Oil
