Oil spikes after inventories; Stocks pullback ahead of the Fed

Summary:

• Oil spikes on massive inventory draw but US production rises again

• US stocks jittery ahead of the Fed

• DE30: Bayer sinks on unfavourable ruling

• May seeks short Brexit extension  

• Large Swiss online retailer accepts cryptos

The main scheduled event of the week for Oil traders has seen a massive drawdown in the latest inventory release, but a further rise in US production has taken the shine off what otherwise appears to be a strongly supportive reading for the price of crude. The weekly EIA number came in at -9.6M against a consensus forecast of +0.6M. Last week saw a drop of 3.9M and now 3 out of the last 4 releases have shown sizable declines. The fall was also larger than last night’s API reading which delivered an unexpected decline of 2.1M. Oil.WTI is back near its 5-month highs after the data with a longer term head and shoulders still in play. Price is now back above the $60 mark

Stock markets have been in a bullish mood in recent sessions, with the expectation of  further central bank supporting driving indices on both sides of the Atlantic up to their highest level of the year yesterday. However, reports not long after the European close on Tuesday that suggest the US and China trade talks may not be going as well as could be hoped caused a swift swoon, and led to the major US indices ending the day in the red.  The pullback has been minimal so far, but it is worth noting that the markets are starting to look a little jittery - in particular the Dax30 has sold off hard and is now trading back below Tuesday’s low. With expectations clearly elevated going into the Fed (decision this evening at 6PM GMT) there is plenty of scope to disappoint and there’s a feeling that we may be nearing an inflexion point.

Bayer (BAYN.DE) is sinking today being the worst performing DAX stock at press time. The company is once again being pressured by the case of Monsanto’s Roundup weedkiller. During the first phase of a trial the US court ruled that the product may have played a significant role in deterioration of victims’ health conditions. Such ruling raises scope for major financial fines to be imposed on the company once the trial ends and these concerns are likely to be the main reason behind Bayer’s share price drop today. Nevertheless, the company upheld its stance that the weedkiller is completely safe and denies any allegations.

Theresa May has asked for short delay to Brexit, with the UK PM sending a letter to the EU ahead of the summit which begins tomorrow. After MPs rejected both May’s withdrawal agreement and a no-deal Brexit last week, it was readily apparent that an extension beyond 29th March was necessary, but many had hoped for a longer extension to pursue a different route. The move by the PM seems to represent her doggedly sticking to her plan in the hope that parliament will change course and accept it. There are reports that she is set to make a statement around 8PM (GMT) this evening, with rumours suggesting she may offer her resignation if the deal is supported in a meaningful vote next week.

Wednesday’s trading on the cryptocurrency market has not been surprising so far. Most of major cryptos have not experienced major price moves. As a result, they have moved close to their opening prices. According to CoinMarketCap, the market capitalization of the cryptocurrency market stands around the $140 billion mark while the largest virtual currency Bitcoin accounts for roughly 50.8% of this value at press time. The largest Swiss online retailer, Digitec Galaxus Group, announced yesterday that it started accepting 10 major cryptocurrencies in its two shops - Digitec and Galaxus. The first of the mentioned online shops focuses on consumer electronics, and the latter sells everyday products. Among the accepted digital currencies we could find the largest virtual currency Bitcoin as well as some major altcoins including Ethereum, Ripple, and Litecoin, according to the company’s communique. However, there is a requirement concerning the spent amount of money. Namely, customers could pay using cryptocurrencies for their purchases exceeding 200 Swiss francs.