Crude oil inventories dropped by 8.4 million barrels to 343.6 million barrels triggering a huge reversal in the December Crude Oil market. Earlier this morning crude oil had been under pressure because of negative news from China which could have meant less demand for energy. Today’s reversal caught many traders by surprised causing a short-covering rally and attracting fresh buying.
The strong reversal in crude oil also ignited a turnaround in U.S. equity markets. Overnight news that China’s market had declined about 5.1% and had entered a new bear market kept downside pressure on the U.S. equity markets. The news regarding crude oil renewed interest in higher risk assets triggering a short-covering rally and encouraging some fresh buying in the equity markets. This was an unusual move as the stock market normally leads crude oil.
September Treasury markets also fell on the bullish crude oil news as it renewed talk of inflation. Traders also sold off the Treasuries as traders sought higher yields in the equity markets.
The U.S. Dollar reversed its earlier bullishness with a sharp break to the downside. The biggest pressure on the Dollar was coming from the September Euro which rose when oil and equity markets rallied. The September British Pound reversed earlier weakness caused by the negative Bank of England minutes report which showed members were not on the same page regarding quantitative easing. The September Canadian Dollar is also a big winner as it gained ground because of the firm equity and oil markets.
December Gold and December Silver mounted a strong reversal as the Dollar weakened. Talk of inflation returning because of higher crude oil prices is also helping the precious metals to rally.
The strong reversal in crude oil also ignited a turnaround in U.S. equity markets. Overnight news that China’s market had declined about 5.1% and had entered a new bear market kept downside pressure on the U.S. equity markets. The news regarding crude oil renewed interest in higher risk assets triggering a short-covering rally and encouraging some fresh buying in the equity markets. This was an unusual move as the stock market normally leads crude oil.
September Treasury markets also fell on the bullish crude oil news as it renewed talk of inflation. Traders also sold off the Treasuries as traders sought higher yields in the equity markets.
The U.S. Dollar reversed its earlier bullishness with a sharp break to the downside. The biggest pressure on the Dollar was coming from the September Euro which rose when oil and equity markets rallied. The September British Pound reversed earlier weakness caused by the negative Bank of England minutes report which showed members were not on the same page regarding quantitative easing. The September Canadian Dollar is also a big winner as it gained ground because of the firm equity and oil markets.
December Gold and December Silver mounted a strong reversal as the Dollar weakened. Talk of inflation returning because of higher crude oil prices is also helping the precious metals to rally.
