Crude oil is trading at 104.26 flat this morning after taking significant losses on Friday. Brent oil is taking cues from WTI and is holding at 109.19 with the spread widening to $5 after coming within $3 last week. WTI crude fluctuated after closing at the lowest level in a month as Russia moved to block any UN resolution threatening force against Syria, dimming speculation that strikes will lead to Middle East supply disruptions. Easing geopolitical tensions in Syria coupled with rising crude output in Libya led to drop in crude oil prices that touched a weekly low of 104.22, with prices on the Nymex contract declining by more than 3 percent during the week.
Improving data from China is limiting oil’s continued climb this morning. The Chinese manufacturing index rose to a six-month high in Sep, signaling that a rebound in the Chine’s economy is gaining steam. The preliminary reading of 51.2 for PMI by HSBC Holdings Plc and Markit Economics compared with a 50.9 by Bloomberg. The gauge was at 50.1 in August. There is an upbeat sentiment about demand for crude in China, especially with the Chinese government providing support in the money markets and allowing corporations to pick up speed. Chinese authorities have so far been reluctant to introduce large-scale stimulus measures, but in late July did announce some steps to boost growth, such as reducing taxes on small companies and encouraging railway development.
Crude oil and natural gas changed direction and fell last week. The FOMC meeting didn’t result in big changes in policy as the FOMC didn’t taper QE3 for now. Perhaps in October the FOMC will announce of a change in policy. Until then, many news items and speeches will unfold during the week including: U.S core durable goods report, ECB president speech, U.S consumer confidence, U.S’s GDP second quarter estimate, Germany’s manufacturing PMI, U.S pending and new home sales, German business climate, and U.S. jobless claims. Traders will also closely watch the weekly API report and EIA inventory data.
Another budget battle looms in Washington. Lawmakers need to agree to raise the debt ceiling by Oct. 1 to avoid a government shutdown, and a potential default on payments, including debt, later in the month. Concerns about a stalemate between Republicans and the White House will weigh on the US dollar and the overall markets while the debate continues.
Natural gas is trading at 3.668 giving up 19 points this morning after weather patterns shift to cooler temperatures and traders sell the commodity to book profits after gas hit a recent high at the end of the week. On a weekly basis, Nymex natural gas prices gained around 0.3 percent on the back of less than expected rise in US natural gas inventories. Further, weakness in the DX supported an upside in prices. Gas prices touched a weekly high of 3.82 and closed at 3.687 in the last trading session
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