Spreadex Market Update
Afternoon of mild rebounds and disappointing US figures
Oil slid even further as the day went on, with Brent Crude touching $51.25 per barrel, its latest 5 and a half year low. It is increasingly looking like commodity’s fate will be decided in the battle between Saudi oil and US shale.
As the US barrel towards energy independence, and the Saudis desperately try to keep prices low to keep America interested, any movements in this key dynamic will most likely be the deciding factor in the long-term future of oil prices. In the short-term, the commodity must endure another US crude oil inventories release tomorrow afternoon; this figure has been inconsistent of late, so expect more instability before the announcement on Wednesday.
One of the upshots of oil’s decline is that petrol prices in the UK have reached a 5 year low, as the Big Four supermarkets engage in a price-slash-war on one of the few battlegrounds that isn’t being co-opted by bargain stores. As Sainsbury and Tesco prepare to release disappointing data from their Christmas period, analysts are predicting petrol could fall to £1 per litre as the sector-giants scrabble for the market-share.
The biggest rebound of the afternoon occurred in the Eurozone, as the volatility from the start of the week calmed. A lack of bad news for the Eurozone is basically akin to good news nowadays and this brief rest bite from Greek-election-panic inspired investors to a bullish sentiment over the continent. This sentiment fed into the UK, and allowed the FTSE to recover slightly from its miserable start to the week.
Finally, with little in the way of data before its open, the Dow Jones started trading fairly flat, as investors were apathetic towards the lifeless US markets. This changed when US services PMI came in at the lowest since February, alongside a drop in ISM non-manufacturing PMI and factory orders, causing the US markets to dip into the red. US data has been consistently disappointing recently, and may cause the US Fed to reconsider its desired raise in interest rates until America can prove its positive figures can be sustained.
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