Morning Minutes

Crude Oil Plunges Between Inventory Reports




The last day of trading for August finds investors focused on energy markets. WTI crude oil is taking it on the chin today, falling 2.7% and dropping back under $90.00/bbl after the American Petroleum Institute reported a 0.6 mmbbl inventory build last week, a big change from the previous week’s 5.6 mmbbl drawdown. Department of Energy weekly oil inventories are due at 10:30 am EDT (street -1.5 mmbbls vs previous -3.3 mmbbls). Meanwhile, natural gas is holding steady just above $9.00/mmbtu with Russia’s Nord Stream 1 pipeline starting a 3-day previously announced maintenance shutdown.

In other commodity action, copper is under pressure again falling 2.5% in response to mixed economic reports. Today’s US ADP payrolls report indicated that private sector job growth held steady rather than accelerating as investors had anticipated (132K vs street 288K and previous 128K). Canadian GDP increased less than expected in Q2 (3.3% vs street 4.4%). Chinese Manufacturing PMI remained in contraction territory below 50 but was not as bad as feared (49.4 vs street 49.2), while Chinese Service PMI beat expectations (52.6 vs street 52.2). On the inflation side of the stagflation theme, European prices continued to increase (9.1% vs street 9.0% and previous 8.9%).

US Chicago PMI is due at 9:45 am EDT (street 52.0). Tonight and tomorrow bring manufacturing PMI reports from around the world, US construction spending and auto sales data with US nonfarm payrolls headlining Friday.

US index futures are bouncing back a bit this morning with gains of 0.2% to 0.8% for NASDAQ futures. The corporate calendar is quiet for the most part. Bed Bath and Beyond is down 27.0% in premarket action this morning after the company announced restructuring plans that include layoffs, store closures and $500 million in new financing.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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