Financial markets gained as the US economic data surprised to the upside, lifting sentiment and expectations on the employment report due today. Wall Street rose with the DJIA and the S&P 500 soaring +1.04% and +1.09% respectively. European bourses climbed higher with the exception of Spanish and Greek markets. In the commodity sector, the front-month contract for WTI crude oil jumped to a 6-day high of 87.42 before settling at 87.09, up +0.99%, as US crude inventory plunged more than anticipated. The equivalent Brent crude contract, however, fell for a 4th day and closed at 108.17.
In the Eurozone, Greek Court of Auditors ruled that plans to cut pension payments and raise the age of entitlement might be unconstitutional. This would impose some problem in the bailout as the Greek government, under pressure from the IMF and the EU, agreed to raise the retirement age from 65 to 67 and reduce pensions above 1000 euro progressively. This would part of the debt-ridden country’s austerity plan to reduce deficit. However, the court ruling would make it difficult for the Parliament to implement these measures. Worse still, it’s reported that a German Government official stated that "there are still open questions, a whole series of open questions regarding Greece within the Troika, but then also within the Eurogroup".
In the US, initial jobless claims fell to 363K in the week ended October 27, down from 369K in the prior week. The market had anticipated a modest gain to 370K. Consumer confidence improved to 72.2 in October from 70.3 a month ago. Moreover, ISM manufacturing index added +0.2 point to 51.7 in October, compared with consensus of a drop to 51. The focus of today is the employment report, the number of non-farm payrolls probably added +120K in October, up +6K from the prior month. However, the unemployment rate might have risen to 7.9%, up from 7.8% in September.
The DOE/EIA reported that total crude oil and petroleum products stocks slipped -0.10 mmb to 1098.26 mmb in the week ended October 26. Crude stockpile decreased -2.05 mmb to 373.08 mmb as stockpiles rose in 3 out of 5 PADDs. Cushing stock dropped -0.67 mmb to 43.39 mmb. Utilization rate was up +0.5% to 87.7%.
Gasoline inventory added +0.95 mmb to 199.50 mmb although demand soared +4.13% to 8.49M bpd. Production added +2.38% to 9.20M bpd while imports rose +17.11% to 0.62M bpd. Distillate inventory slid -0.09 mmb to 117.93 mmb as demand rose 0.48% to 3.54M bpd. Imports slipped -45.76% to 0.03M bpd while production gained +2.81% to 4.51M bpd during the week.
Oil and Gold Reports contributed by Oil N' Gold