Oil down by 3% on Friday

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Last week ended with the release of Japan’s national CPI (Consumer Price Index) for October and also the early Tokio CPI figures for November. The outcome should have been a reassurance for the market participants that there still is a chance BoJ’s (Bank of Japan) Governor Kuroda announces further QE in the near future; instead, a marginally increase was registered in Japan’s inflation. As for the data, Japan’s CPI excluding fresh food and energy yoy (year-on-year) for October came out 0.7%, under the expected 0.8% and previous 0.9%, being the only disappointing indicator in this batch; the CPI excluding fresh foods yoy remained constant at -0.1% and the CPI yoy rose 0.3% from September’s 0%.

In Tokio, the CPI excluding fresh foods and energy yoy went up to 0% in November from October’s -0.2%, the CPI excluding fresh foods yoy printed 0.6% (previously 0.4%), with the CPI yoy coming at 0.2% from a previous 0.1%. Overall, the data is not as under-par as in the previous months, but far from BoJ’s 2% inflation target.

The GBP/USD major recovered to 1.5068 at the end of the week, the enabler being the second estimate if UK’s Q3 GDP (Gross Domestic Product) which didn’t revised the growth rate announced initially. The GDP remained unchanged at 2.3% yoy and 0.5% qoq (quarter-on-quarter) as private consumption was revised up to 0.8% qoq and business investment also went up to 2.2%. Although the pound was supported by the release, the impression for Friday is still weak. Another thing that is to be considered for this hike is the lack of information from the US side, the impact having no counteraction.

The black gold went down 3% on Friday mostly due to trading going thin after the Thanksgiving holiday, but also the concerns regarding the global supply glut. WTI (West Texas Intermediate) barrel dropped $1.27 or 2.9% to settle at $41.71/barrel. Over the course of last week, the WTI futures sank 0.6%, registering losses the 4th week in a row. Another American important actor, the Brent barrel also finished the week 1.6% lower at $45.46/barrel.

The commodities are being pushed down as the dollar strengthens in expectation of a Fed rate hike and concerns about the supply glut are rising. At the beginning of last week we should recall that EIA (Energy Information Administration) released information according to which the US crude inventories went up by 1 million barrels in the week ending November 20th, although slightly under expectations. API (American Petroleum Institute) reported a 2.6 million barrels increase for last week. US stocks are at their highest levels in 80 years.

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