Fundamental and Technical Analysis
US Q3 GDP turned out strong, supporting markets after the weak Preliminary Manufacturing PMI; US Durable Goods Orders will be released at 9.30pm (Singapore Time): Out of the 3 major US economic data releasing this week, we have a tie between the bulls and the bears. This should cause mixed sentiments towards the Dec rate hike as displayed by the stable USD strength. This should apply for the data-centric Federal Reserve as well if they are solely relying on US economic data. With US Durable Goods Orders releasing later, this would be the tie breaker which could either cause the USD strength to move higher or lower. The previous high for the US Dollar Index was at 100.39, as we approach the Dec’15 FOMC, if the probability of a rate hike edges higher, the US Dollar Index is expected to form a new high.
US crude oil and natural gas inventories scheduled for release tonight at 11.30pm and tomorrow morning at 1am respectively (Singapore Time): Both US crude oil and natural gas inventories will be released later. The inventory figures remain crucial to depict prices as inventories are reaching record highs. For crude oil, refinery utilization is increasing which could result in decreases to inventories. This could help fuel the current bullish momentum that prices are facing. We also have our eyes on US crude oil production. Production has been maintaining strong for awhile now and if this continues, easing of the global oversupply could be delayed. For natural gas, we could be seeing the start of decreases to inventories with winter demand kicking in. When inventories start to drop, this should keep prices from falling further.
Prices continued its increase after geopolitical tensions heightened. If tensions continue to increase, we may see more increase. Apart from geopolitical tensions, we await the economic data aforementioned. For the US economic data, we would use the US Dollar Index as an indicator as to how oil prices are affected. We would think that as long as US Dollar Index does not climb above 100, the bullish momentum should continue. In terms of inventories, we believe that it should decrease for the first time in weeks, and thus should also support higher prices. This would mean that oil prices should have more upside today, especially if the events turn out as expected. We see a strong resistance for WTI and Brent Jan’16 at $43.49 and $46.49 and this should break in the most bullish scenario.
Prices are slowly trending upwards again after the big drop from last week. If US natural gas inventories drops this week, we should be seeing prices maintain above current support of $2.228 for today. This level could be tested in anticipation of US natural gas inventory release, however, should not break especially if inventories turned out lower. (Read Report)
Source : Phillip Futures Pte Ltd