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- Rise in US oil inventories sends WTI/Brent spread beyond $4/barrel
- WTI "shows some teeth" to hold at $44/b mark, says Hansen
- Ongoing rangebound USDJPY offers potential dip trade, says Arkouzis Dahlerup
- EURUSD rally likely to be capped at topside of 113.85
- NZD hit by Fontera downgrade on 2015 production figures, says Davis
- Nokia's relative swing in fortunes continues after strong results, says Garnry
By Martin O'Rourke
US oil benchmark WTI slipped to the $44.40/barrel mark during the Asian session widening the spread to European benchmark Brent crude to over $4/b on the back of a rise in US oil inventory figures.
"This inventory figure is on the strong side and adding pressure on WTI," says Saxo Bank's head of commodities Ole Hansen. "Production simply just continues to rise and we've seen Barclays slash its forecast for 2015 from $72/b to just $44/b."
Billions of dollars has moved into ETFs in the past couple of months, he says, and "patience is becoming a bit of a thing there," but Hansen sees hope for WTI despite the downward pressure. "WTI is continuing to show some teeth so although it's still a sell fundamentally, it's still got some friends out there."
WTI is sticking in a tight $44-45.50/b range, he says.
Gold, meanwhile, may be drifting lower but Hansen sees support at $1,253-55/oz likely to cap any further move below with gold currently at $1,272/oz. "It's a mixed bag on the back of international developments offering some support but it's drifting a little lower in line with the dollar."
"As long as we stay above that level, we'll still see some buying of dips going on," he says.
Meanwhile copper may be moving to a more balanced state after hitting its lowest since 2009 in recent days. "There are some mining companies reportedly scaling back production which will help balance the market," says Hansen.
Take a dip
The rangebound nature of USDJPY this week of 117.30-118.50 is offering "dips for a potential play below 117.30 back above 118.00," says Nana Arkouzis Dahlerup, speaking live from the Copenhagen trading floor.
Meanwhile, the EURUSD rally is likely to be capped at two potential ceilings of 1.1325 or 1.1385, she says. "As long as the EURUSD doesn't clear the 115 handle, the downside is still prevailing."
Repercussions from the Greek elections continue to play out here with the banks following the Syriza victory at the weekend taking a hammering and vols on one-month EURUSD falling from around 14 to 12.0.
Try as it might, NZD can't escape the intertwining of its fortunes with the national dairy producer Fontera and its revision down of production figures had a negative impact on NZD, says the Singapore desk's Martin Davis, sending NZDUSD below 73.00 at one point before settling at about 73.4.
Davis says a decision by the Reserve Bank of New Zealand to move to a neutral stance on rates with a hint that it could lower rates in the future, is also adding pressure on NZD.
AUD is finding the ride rough too with AUDUSD taking a look at the 78.50 level.
Don't Nok(ia) that
Nokia's return to growth continues to gather pace "and will make developments on its share price this morning interesting," says Saxo Bank's head of equities Peter Garnry.
Results season is of course in full flow and strong results for Boeing were also matched by "a surprise to the upside for Deutsche Bank," he says.
But, despite the gloss, Garnry is "not impressed" by Facebook's Q4 and its subsequent share price fall of 2% corroborates that, he says. Garnry points to a potential straddle sell on Facebook as the market awaits further indications as to how the Facebook business model might evolve."
The US continues to pump out oil as if it is going out of fashion. Photo: istock
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