WTI crude falls to seven-week low

Fundamental outlook

CRUDE prices plunged to a two-month low as supply increased. The US trading week was cut short due to the Thanksgiving holiday. UK faces a tough challenge meeting the Brexit deadline.

US housing starts rose 1.23 million in October while building permits expanded 1.26 million. Both matched forecast.

American orders for durable goods slid 4.4 per cent in October. Excluding transport equipment, core orders rose 0.1 per cent. Both data were below forecast. Weekly claims increased to 224,000 in the week ended November 17.

Last Wednesday, President Donald Trump released a press note stating the importance of maintaining bilateral ties with Saudi Arabia. The message hints the protection of national interest between the two countries over the murder of reporter Jamal Khashoggi which may involve Saudi’s royal family.

WTI Crude prices fell more than 30 per cent since early October and hit US$50 per barrel before the weekend. President Trump has openly favoured lower oil prices to capture . The OPEC conglomerate will meet in Vienna on December 6 and investors expect the leaders will discuss on curtailing production.

German manufacturing index rose to 51.6 in November, the slowest recorded growth since March 2016. In the eurozone, Markit reported that the manufacturing index also slid to 51.5, making it the fourth consecutive month of decline.

Focus is now on the Brexit negotiation between UK and the European Commission. The major deal is expected to be finalised this week. So far, Prime Minister Theresa May is not getting support from the opposition Labour party which criticised her inefficiency in the negotiation.

Technical forecast

/Japanese yen traded in a V-pattern last week amid uncertainties. We have identified a very strong resistance at 114 to 114.50. This week, we reckoned the trend is still prone to fall and it will likely fall to 111.50.

Euro/US dollar showed bear sentiment after topping off 1.14 last week. The trend is prone to decline further in coming week if the aforementioned resistance can remain intact. Downside target lies at 1.1200 with some bargain-hunting activity to be expected.

British pound/US dollar traded in a flat pattern below the 1.29 benchmark last week as traders watch the developments of the Brexit agreement. This week, we expect some whipsaw movement due to the current erratic market trend with resistances expected at R1 – 1.29 and R2 – 1.31. Downside support lies at 1.27. Failing to hold the bears will open to a new selling rush in market.

Dar Wong is a professional in the finance industry based in with 29 years of global trading experiences. The expression is solely his own. You may reach him at [email protected]

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Source: Borneo Post Online

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