Oil prices saw a slightly more interesting turn of events compared to the currency and equities markets, and attention has now returned to the third and final Presidential debate.
Crude oil prices saw a surge overnight from the EIA report, which showed that stockpiles have resumed their path of decline. WTI extended to trade above US$51.50/bbl and printed a fresh 15-month high before easing slightly to hover just below the level when last checked.
While we had the lead from the API report earlier, the unexpected 5.2-million-barrel drop provided the extra push for prices. Support also came from comments by Saudi Arabia’s oil minister, Khalid Al-Falih, stating that many non-OPEC producers are willing to join the organisation’s efforts to curb oil production and stabilize prices.
With WTI crude oil prices having remained in the sub-US$60/bbl zone after falling through the ranks of US$100/bbl from 2014, the bite on oil producing countries may finally be starting to get painful. Notably, the IMF recently lowered the growth forecast for oil-dependent Saudi Arabia, which is also leading the recent conversation on the oil production freeze. The stars seem to have aligned thus far and hopes have certainly been fuelled for a November deal.
Meanwhile, volatility continues to recede as the market cruises through this period of key events. The dollar index was largely unchanged through Wednesday and the S&P 500 saw moderate gains of 0.22%. AUD/USD saw the biggest jump since Tuesday and has firmly broken above the $0.7700 level.
USD/AXJ likewise either held flat or saw mild gains on Tuesday as the dollar rally lost steam. For equities, bank earnings continue to provide spectacular records despite the smokescreen of scandals and lawsuits. After-hours reports have all been generally positive and this optimism is likely to once again spread east.
The third and final Presidential debate will capture the world’s attention today but the impact on markets may be unimpressive, as with the previous two. Polls are favouring Democratic nominee Hillary Clinton three weeks ahead of Election Day and I am hoping my faith in statistics will not be crushed once again.