Fed Chair Janet Yellen piled onto the crude oil market after telling Congress that a December rate hike was a, "Live possibility!" Live--it’s a December rate hike! Maybe Yellen instead of Donald Trump should be on Saturday Night Live because she seems to get a major reaction to saying "live"!
So far for the week the spot WI contract is still lower by about $0.65/bbl while the spot Brent contract is lower by about $0.50/bbl. The market continues to trade in a choppy sideways pattern with the bias slightly to the downside. Today’s EIA inventory report will likely be a market mover if the data is in sync with bearish API data.
Big pain in the oil patch as Chesapeake Energy cuts 15% of its total workforce amounting to 740 high paying energy jobs. The company, which has already cut its capital spending by more than 40% is retrenching even more to stay what CEO Doug Lawler will be an "enduring enterprise."
A large draw in total U.S. crude oil stocks reported by the API late yesterday has resulted in a light round of short covering in a market that remains oversold. As of this morning the crude oil market is still in positive territory but well off of the overnight highs hit after the API data release as the industry awaits the more widely followed EIA oil inventory snapshot.
More signs of a slowdown in the Chinese economy may not be enough to overcome a potential slowdown in U.S. oil output. The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index fell to 47.0 in September, its lowest since March 2009 yet only down slightly from last month. The weakness was well telegraphed by other readings but how well telegraphed was the drop in U.S. oil inventories?
The day after crude oil prices rose almost 5% the dogma of the dollar versus oil inverse relationship has come to a screeching halt ahead of the most exciting FOMC meetings in a decade. As the Fed moves closer to raising interest rates and getting closer to a normalization of interest rate policy the correlation between the dollar and oil is breaking down.