FXS: Commodities are generally higher this morning following better−than−expected data out of the US yesterday
Commodity News
Commodities are generally higher this morning following better-than-expected data out of the US yesterday. EUR/USD is trading just above 1.45 and European stocks are slightly higher. Tropical cyclone Laurence strengthened further on its way to Australia’s north-western coastline, suggesting risks of further output disruptions. Copenhagen talks on climate change are entering critical phase with a final statement expected at the end of the week.
Data out yesterday saw US industrial production posting a larger-than-expected rise in November; this boosted commodities markets’ confidence in the US economy despite a very dismal reading in the Empire manufacturing survey. Separately, data on producer prices showed a significant rise in producers’ costs last month. Both oil and base metals benefited from the overall upbeat data flow out of the US.
In its monthly report, OPEC revised up its oil demand forecast for next year, and now expects world oil demand to increase by 800,000 bpd in 2010. While OPEC has kept its production targets unchanged since last December, the cartel’s secretary-general El-Badri yesterday said that he still is not sure whether quotas will be held steady when OPEC officials meet next week. We still look for OPEC to leave quotas unchanged but believe that members could slip (further) on compliance as global demand picks up next year.
The API report on US oil inventories out last night revealed stockpiling in both crude and gasoline in the week to 11 December whereas distillate stocks were down. For the broader EIA figures due this afternoon, we look for a draw in crude inventories (see chart) whereas distillates could post a small rise; our model predicts gasoline stocks to be broadly unchanged. The latter contrasts with the Bloomberg survey which points to a rise in gasoline last week.
The Euroland flash PMIs have just been published: both the services and the manufacturing indices posted readings slightly above the median forecast for December. The composite PMI for the eurozone came in at 54.2 and thus remains firmly above the 50 boom/bust level. In the US, both housing starts and building permits are expected to have risen a little in November. Tonight, the FOMC meeting will take centre state.
