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Oil declines as US stockpile gains counter Nigeria disruption
Wed, May 11 2016, 05:56 GMT – Bloomberg
Oil declined as rising US crude stockpiles countered supply disruptions in Nigeria, Africa’s second-biggest producer.
Futures slid as much as 0.7 per cent in New York after advancing 2.8 per cent Tuesday.
US inventories increased by 3.45 million barrels last week, the industry-funded American Petroleum Institute was said to report. Government data Wednesday is forecast to show stockpiles expanded from the highest level since 1929.
Royal Dutch Shell Plc and Chevron Corp are evacuating workers from the Niger Delta because of deteriorating security, a union official said.
Oil has rebounded after slumping earlier this year to the lowest level since 2003 on signs the global gut is easing as US output declines. Producers in Canada including Shell and ConocoPhillips are beginning the process of restarting operations after the easing of wildfires that curbed supply.
“The impact of supply disruptions at the moment is a lot less given the very large stockpiles and supply surplus, but if we were to see a prolonged outage then it would help to redress the significant increase we saw in Iranian and Iraqi production last month,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said by phone.
“The market has rallied quite a long way amid the US production cuts.”
West Texas Intermediate for June delivery fell as much as 32 US cents to US$44.34 a barrel on the New York Mercantile Exchange and was at US$44.45 at 12:59 pm Hong Kong time.
The contract gained US$1.22 to close at US$44.66 on Tuesday, paring its 2.7 per cent loss the previous session. Total volume traded was about 34 per cent below the 100-day average. Prices have gained about 70 per cent from a low in February.
Brent for July settlement lost as much as 29 US cents, or 0.6 per cent, to US$45.23 a barrel on the London-based ICE Futures Europe exchange. The contract climbed US$1.89 to US$45.52 on Tuesday. The global benchmark crude was at a premium of 22 US cents to WTI for July.
Crude supplies at Cushing, Oklahoma, the delivery point for WTI and the biggest US oil-storage hub, increased by 1.46 million barrels last week, the API said Tuesday, according to a person familiar with the figures.
Nationwide stockpiles probably expanded by 750,000 barrels, according to the median estimate in a Bloomberg survey before an Energy Information Administration report.
Sources: Bloomberg
Good U.S. payrolls gains seen, but swelling labor force to cap wage growth
U.S. employment likely rose again in April, but a rush of job seekers into the labor market should keep wage gains moderate and buy a cautious Federal Reserve more time before raising interest rates again.
Nonfarm payrolls probably increased by 202,000 last month in U.S. Labor Department data due for publication on Friday, after growing by 215,000 in March, according to a Reuters survey of economists.
The unemployment rate is forecast to have held at 5.0 percent as improving labor market conditions lured some previously discouraged job seekers back into the workforce.
Job market strength would reinforce that view that the economy remains healthy, despite growth slowing sharply in the first quarter this year, but the influx of jobseekers may support Federal Reserve Chair Janet Yellen’s argument that there is still some slack in labor market.
“On the margin, the rise in the participation rate probably slows both the growth rate in wages and the Fed, but the reality is that, generally speaking, wage and price inflation has shown some signs of turning and picking up,” said Michael Hanson, a senior economist at Bank of America Merrill Lynch in New York.
Average hourly earnings are forecast to rise 0.3 percent in April after a similar gain in March. That would take the year-on-year increase to 2.4 percent from 2.3 percent in March, still below the 3.0 percent advance that economists say is needed for inflation to rise to the Fed’s 2.0 percent target.
The U.S. central bank last month offered a fairly upbeat assessment of the labor market, saying that conditions had “improved further.”
The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade. Fed officials have forecast two more rate hikes for this year.
Market-based measures of Fed policy expectations have virtually priced out an interest rate increase at the Fed’s June 14-15 meeting, according to CME Group’s FedWatch. They see a less than 50 percent probability of rate hikes in September and November, with a 59 percent chance at the December meeting.
SWELLING LABOR FORCE
“I am seeing one rate hike this year and I don’t think it will be in June,” said Dan North, chief economist at Euler Hermes North America in Baltimore.
“While employment growth has been good, there is still quite a bit of slack in the labor market. People are finally coming back in off the sidelines,” he said.
The labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, has increased 0.6 percentage points since dipping to 62.4 percent in September and gains have been across all age groups.
About 2.4 million people have entered or re-entered the job market since September last year, the second-largest increase in the labor force over a six-month period on record.
The vast private services sector likely dominated employment gains in April. Manufacturing is expected to have shed another 5,000 jobs last month after losing 29,000 in March, the biggest loss for the sector since December 2009.
Further job losses are likely in mining as the energy sector adjusts to weak profits from a recent prolonged plunge in oil prices. Mining payrolls have decreased by 185,000 jobs since peaking in September 2014, with 75 percent of the losses in support activities.
Construction employment is expected to have slowed after nine straight months of gains, with home building showing some signs of fatigue in April. Retail payrolls are forecast to have also slowed down after averaging 60,433 per month in the first quarter, despite sluggish sales.
Sources: Reuters
Oil stable as production outages offset impact of stronger dollar
[SINGAPORE] Oil prices were steady on Friday after a run up on supply disruptions, especially in the Americas, where wildfires continue to rage near Canada’s huge oil sand fields, tightening a market suffering global oversupply.
The disruptions helped offset the impact of a stronger dollar this week, which potentially reduces demand for crude as it makes dollar-traded imports more expensive for countries using other currencies.
International benchmark Brent crude futures were trading at US$44.95 per barrel at 0203 GMT, 6 cents below their last settlement but flat with its first close this week.
US West Texas Intermediate (WTI) crude futures were at US$44.17, down 15 cents but over 1 per cent above this week’s first close. “Supply disruptions and closures helped push crude oil prices higher, despite the stronger US-dollar,” ANZ bank said on Friday.
A massive fire around the Canadian oil city of Fort McMurray has forced the evacuation of all its residents and the closure of 690,000 barrels per day (bpd) worth of production out of Canada’s total oil sands output of 2.2 million bpd.
Adding to the production outage in Canada is an ongoing decline in US output. “While the wildfire in the oil-sands regions of Canada is still wreaking havoc with many producers, US oil output continues to feel the impact of low prices,” ANZ said.
Data by the US Energy Information Administration (EIA) shows that U.S. crude oil output has fallen by 410,000 bpd this year, and by 800,000 bpd since mid-2015, as many producers succumb to a rout that saw prices tumble 70 per cent between mid-2014 and early-2016.
Analysts said that the hits to North American output, combined with disruptions in Latin America, were contributing to a fast erosion of global oversupply that peaked as high as 2 million barrels bpd last year.
“Unplanned oil supply disruptions have been a key element so far this year that have contributed to a tighter oil market than was otherwise expected,” said analyst Guy Baber of Simmons & Co.
Sources: REUTERS
AUD/USD Technical Levels for USA Trading Sessions 05/05/2016
The AUD/USD next supports are seen at 0.7446 (May 4 low), 0.7414 (Mar 16 low) and 0.7390 (Mar 7 low). On the other hand, resistances could be found at 0.7558 (50-day SMA), 0.7653 (20-day SMA) and 0.7719 (May 3 high).
EUR/USD Technical Levels for USA Trading Sessions 05/05/2016
The EUR/USD pair is now losing 0.50% at 1.1430 and a break below 1.1359 (20-day SMA) would open the door to 1.1226 (55-day SMA) and finally 1.1213 (low Apr.25). On the other hand, the initial hurdle lines up at 1.1615 (2016 high May 3) followed by 1.1713 (high Aug.24 2015) and finally 1.2110 (2015 high Jan.2).
Trade n Trend 