Oil dips after inventories and OPEC news; Stocks slide

Summary:

• Large inventory build and OPEC+ talk weighs on Oil

• Stocks pull back further

• Match feeling lovesick

• UK election campaigns to start 

The weekly crude oil inventory release has shown a huge increase and come in far higher than expected, sending the price of brent back down below the $63 mark after the market earlier hit a 6-week high. The report came in as follows:

• Crude oil inventories: +7.9M vs +2.0M exp. API: +4.3M

• Gasoline: -2.8M vs -2.0M exp. API: -4.0M

• Distillates: -0.6M vs -1.3M exp. API: -1.6M

The headline reading not only was well above the consensus forecast but also comfortably higher than last night’s API reading. This is the 7th time in the past 8 weeks that the print has come in higher than expected. However, the drawdown in gasoline and distillates does take some of the negative aspect away from this report.

There was an initial wave of selling seen as the data dropped but the market was looking to recover and move back near its 6-week high made earlier at 63.28 before more news crossed the wires. Reports that the larger OPEC+ producers aren’t pushing for deeper output cuts saw sellers have another go and the oil markets have turned lower on the day at the time of writing. 

 The recent trade in US indices has been fairly solid with new highs seen in the major benchmarks and despite a lower close yesterday they remain not far from their record peaks. The US small cap index (US2000 on xStation) has also enjoyed a good run higher in recent weeks but unlike its large cap peers it has failed to move up into uncharted territory. There are signs in the recent price action that this rally may be getting a little weary and running out of steam with the past couple of daily candlesticks printing shooting stars. For the second day running there’s been some small selling seen from the cash open and US indices all trade in the red on the European close. 

Shareholders in Match will be left feeling a little lovesick this afternoon with the stock falling by over 10% after the company posted its Q3 earnings last night after the closing bell. Earnings per share of $0.51 beat the $0.42 expected but it is some concerns around future business activity that can explain the lower open with Q4 projections of $545-555M lower than the consensus estimate of $559.3. The losses have been pared somewhat but the market is still firmly lower on the day. 

PM Boris Johnson will ask the Queen to dissolve parliament and in doing so mark the start of the campaign for the December 12th election. There’s an 11 point lead for the Conservatives according to a poll of polls as the parties are set to officially begin their campaigns. The Conservatives enjoy a sizable lead in popular opinion polls, but this could well give a misleading picture of their true position when it comes to picking up seats. Yesterday the party was marred by two mini-scandals with first Jacob Rees Mogg’s comments on the Grenfell Tower fire providing plenty of ammunition for those who brand the Tories as aloof and out of touch before a doctored tweet from the official account revealed that the darker arts of politics will be regularly seen in the run-up to the polls. The pound is little change on the day as traders await more clues as to what lies ahead.