Crude Oil hits $50

The end of last week brought UK’s ONS (Office for National Statistics) latest data release, which holds the UK responsible for a higher-than-expected trade deficit for the month of August, while the fall in output has reached its fastest pace in 13 years.  The goods trade deficit came out at GBP 11.1 billion, in comparison to July’s positively revised GBL 12.2 billion. Expectations were of an only 9.9 deficit. More bad news from the UK as construction output also fell 4.3%. On the bright side though, exports went up with 3.5% after a 9% drop in the previous month, but imports fell 0.7%. Despite these readings, the total trade deficit missed the forecasted GBP 2.2 billion and only pushed through at GBP 3.3 billion. The data emphasizes the toll which the global economic slowdown is taking on UK’s international trade. The most worrying fact is the fall in imports which may stand up for a weak domestic demand, regardless of the uptick in wages and the tightening conditions on the labor market.

The stream of data released on Friday also shows that the US imports fell with a seasonally adjusted value of 0.1% in the month of September, although the expected fall was of 1.6%. Also, the core import price index (excludes the imports of fuel) went down by 0.3%, while the annualized figure for this indicator shows a decline of 3.1%. The annualized import prices are short by 10.7%, with the main reason here being the low oil prices in corroboration with a strong US dollar.

The CAD/USD race brings the currencies back to their original starting point regarding one another in Friday’s session, which is the mid-1.2900’s are. The major gained some traction after the Canadian docket results showing that the jobless rate went up to 7.1% in September, with the Net Change in Employment spiked by +12.1K versus and expected 10K. The WTI (West Texas Intermediate) barrel trading right around the $50.00 threshold also offers additional support to the CAD.

Friday marked the end of the oil’s gain spree when WTI posted right under the $50.00/barrel mark. Support still exists for the crude from the jitters surrounding the Middle East, the stars being Russia and Syria. In addition to this, the demand for USD-denominated assets is still up especially after the post-FOMC minutes selling sentiment. When looking at the crude oil prices we should consider powerful the potential agreement between OPEC and non-OPEC oil suppliers regarding the production quota, which may well start with Russia.