|09-03-2014, 04:02 PM||#1|
Oil futures slightly higher after yesterday`s slide
Crude oil prices little upside reaction early Wednesday, following the steep losses overnight with Brent reaching the lowest level in 16 months as the dollar rose to 2014 year high.
The global benchmarks were strongly pressured by the weakness of the manufacturing sector in Europe and China, with rising supply from the Organization of Petroleum Exporting Countries to the highest level in a year, in addition to the stronger dollar.
In the US, manufacturing continues to show strength with the ISM report showing some its best numbers of the recovery. The ISM surprisingly climbed to 59.0, the highest level since March 2011, compared with 57.1 in July. Analysts had called for a reading of 57.1.
If Friday`s employment report shows the same kind of strength as yesterday`s reports did, then expectations for Fed tightening will definitely be pulled forward.
The dollar strength was majorly behind the steep slide in the oil prices. The USDIX almost traded around 83.00, the highest level since August 2013.
Today`s economic agenda will offer final reading of Services PMI of Europe`s largest economies and the euro area, where further weakness in the sector will bring down expectations of the services outlook ahead of the European Central Bank policy outcome tomorrow.
The geopolitical tensions in Eastern Europe continue to support oil prices, especially Brent, while giving the dollar more space to rally as markets still fears further sanctions against Russia by the West and possible disruption despite the ample supplies around the world.
In Ukraine, government accused Russia of "direct and undisguised aggression" that caused Kiev`s forces to suffer a further reverse in their war with pro-Moscow rebels.
As of 03:34 am ET:
- West Texas Intermediate for delivery in October rose 0.60% to $93.44 a barrel on the New York Mercantile Exchange
- Brent for October delivery rose 0.62% to $100.96 a barrel on the ICE exchange in London
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