Oil prices took a left hook to the chin after the EIA report showed stockpiles posted their largest gain since May. The crude oil inventory report showed refiners slowed output, the first time since mid-August but the build was driven as demand eased. US crude exports apparently are not getting a boost from the Saudi oil field attacks. Crude prices could get ugly if WTI can’t hold the $52.50 a barrel level. The overall health of the US economy could be described as anemic at best. The recent softer than expected ISM, ADP and construction spending data is raising recession concerns and we could see the demand outlook for crude to continue to fall.
The overall report did have some bullish highlights, total crude and products inventories fell by 851,000 barrels. Crude prices never benefitted from a spike in demand and unless we see a relief rally from a positive development in the trade war, we could see bearish momentum accelerate.
The Canadian dollar mirrored the move with oil prices an fell to session lows against the greenback. The 1.3300 level is proving to be strong resistance for USD/CAD. If bullish momentum accelerates, 1.3450 could be the next major upside target.
US equities fell to the session lows after reports that Vermont Senator Bernie Sanders had an artery blockage. Sanders had two stents that were successfully inserted and the 78-year old cancel all his events until further notice. Wall Street has been becoming increasing nervous that Senator Warren is anti-business and would look to break up a lot of the big tech stocks. If Sanders steps down in the pursuit of the Democratic nomination, Warren could easily gain most of his progressive supporters.
Risk aversion continues to help drive gold prices higher. Gold extended its gains above $1,500 an ounce on mounting concerns the US economy is weakening. Gold benefited from the ADP private payroll data that highlighted the labor market is softening, the EIA report showed demand for crude is not strong and Wall Street is scared of an Elizabeth Warren Presidency. The US equity selloff is being led lower by Tech, Materials, Industrials and Consumer Discretionary.