Vang SJC

On Thursday (10/11), oil prices are climbing up after having a relatively wide movement range yesterday on the back of US Election result and crude inventories data.

At 7:45 (GMT) today, the US West Texas Intermediate – WTI – poises at $46.17/barrel, 36 points higher than the open price. On the day before, this commodity witnessed a big volalitity as fluctuating between $43.57 and $46.42/barrel, testing a low since September 20.

wti-d1

Fig WTI D1 Technical Chart

Factors that covers oil prices:

Supply side

  • EIA and API data:

On Wednesday, Energy Information Administration (EIA) released the data on oil stockpiles in the last week. According to the report, in the week ending on November 04, US crude inventories increased by 2.4 million barrels, which is higher than the expectation of 1.3 million barrels. Crude inventories had two consecutive weekly advance as the change in the preceding period was an significant increase of 14.4 million barrels. Total U.S oil inventories was still at a high level with 485 million barrels.

EIA data released followed the API report on Tuesday of a rise of 4.4 million barrels in the past week, in comparison with the previous reading of 9.3 million barrels.

All these data pointed that the US supply is still at an overhang, dragging the “black gold” prices down.

  • Operation in Oklahoma re-started after the earthquake on Sunday had damaged the oil pipline here a little.
  • OPEC “freeze output”

Trump’s triumpth in US Election will have huge effects on OPEC oil production agreement. In the campaign, Trump said that his policies are to support domestic oil industry. That would make OPEC production cut more complicated. OPEC agreement have already been hard to reach when some of key members such as Iran, Iraq, Nigeria, Libya had said that they might not involve in this agreement.

  • Russia oil production may rise to 555 – 560 million tonnes by 2020
  • Iran oil exports are expected to fall 7.5% to 2.37 million barrels/day in November. This is a four-month low because of the lower demand in Europe.

Demand side:

  • China:

China is one of the countries that have the largest oil demand in the world. Therefore, the economic indicators, which show the health of Chinese economy, would have a huge effect on oil prices.

On Tuesday, the data of trade balance in China showed that both exports and imports in October have seen decline. While exports in October experienced a decrease of 7.3% compared to that a year earlier, imports fell 1.4%. Particularly, China oil import in October was just 6.8 million barrels, while this figure in September was 8.1 million barrels. According to Barclays, a decline in oil import this month is due to the result of falling strategic stockpiling.

Value of greenback

  • US Election:

A Trump victory in US Election shocked the financial market. Before that, the market had priced the chance that Hillary Clinton might reach the White House was really high. They had expected Clinton to be US president because they believed that would benefit the U.S economy as well as global economy. Therefore, the fact that Donald Trump won to be the next president spun all sectors in markets. As Trump appeared to be U.S next president, U.S index stumbled to one-month low at 95.85. However, the reaading rebounded and currently is posing around 98.41.

dxy

Fig. DXY H4 Technical Chart

  • The data of U.S Final whole sale inventories in October was1%, lower than expected at 0.2%.

Oil is a dollar-priced commodity. So, U.S dollar increase in value pulls down the oil price.

Upcoming events:

  • Later today, US Department of Labor will publish the figure of unemployment claims in the last week, forecast to register at 267,000, nearly unchanged compared with the reading of 265,000 in the week prior.
  • During the rest of this week, several FED officials are schedule to do their speech, markets now are turning all eyes on their comments, eager to get any clues or statement regarding US interest rate, as well as where US economy, in particular, and global market, in general, will go after the billionaire – Donald Trump – was selected to be the 45th President of the United States.

 

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