Energy futures endured a rather mixed day yesterday moving lower in the morning before rebounding at the start of the US open only to close lower by the end of the session. A week US Housing Starts number did little to boost prices as investors look to the FED meeting today and to the end of the G20 meeting in Mexico for a further round of QE and a solution to the Spanish and Greek debt problem, respectively. It now looks like the second Greek bailout will be renegotiated and the rumors are that Germany is poised to use the dual European bailout funds to buy up the debt of Italy and Spain. Turning to last night’s closing levels, Brent crude closed out the session at $98.76 down $0.29. WTI crude closed out the session at $84.03 up $0.76. Gasoil closed at $845.00 up $3.50 while UK Nat Gas closed at £53.42 down £0.45.
The Euro is hovering over the 1.2680 region today, retracing yesterday’s gains after climbing as high as the 1.2730 area. We need to see a clear break of the 1.2700 area and a close above it to maintain the upward momentum. With the closing of the G20 meeting and the FED meeting tonight a return of risk appetite could be on the cards handing a further boost to the Euro. At the moment, EUR/USD is losing 0.05% at 1.2681, facing the next support at 1.2568 (MA10d) ahead of 1.2552 then 1.2542 (low Jun.14) and 1.2528 (MA21d). On the upside, a break above 1.2748 (high Jun.18) would bring 1.2820 (high May 22) then 1.2854 (MA55d) and 1.2870 (high May 15).
Equities closed out yesterday’s session higher with the FTSE in the UK closing at 5586.31 up 95.22. Over in the US the DJIA closed at 12837.33 up 95.51 while the S&P closed at 1357.98 up 13.20. Gold is trading at 1621.90 while Silver is at 28.43. The VIX rose slightly yesterday to close at 18.38 up 0.33%.
In economic data today we have German Producer Prices out shortly and they will be followed up with BOE Minutes and UK Jobless Change this-morning. We have nothing else out of the Euro-Zone and in the afternoon we have a FOMC Rate Decision where all eyes will not be on the rate but on the details of the text to see if they give a clue to another possible round of QE this summer. It should be noted that the QE in both 2009 and 2010 started in November while Operation Twist started in September 2011 so QE3 could be a few months away yet. We also have the DOE Inventory Report out today. Last night’s API report showed us a 0.550k draw in crude stocks, a 1.070k build in gasoline and a 0.269k draw in distillates.
For Brent crude we draw first resistance at $96.00, followed by $97.00. On the downside we draw first support at $95.00, followed by $94.00.
For Gasoil we draw first resistance at $848.00, followed by $852.00. On the downside we draw first support at $842.00, followed by $838.00.