Oil prices rose to 18 months high touching $86.30 for the day. The US Institute for Supply Management’s Index of Non-Manufacturing businesses rose to 55.4 from the expected figure of 54.1. The pending home sales for the month also jumped to 8.2% from the expected figure of -0.5% which shows clear sign of US recovery. The US Consumer Confidence Index also rose from 46.4 to 52.5 beyond the expectation of 50.1 which infuses the confidence of more consumption of petroleum products. The indicators reflect the revival taking place in the US economy.
The ADP Non-Farm Employment figure Shed 23000 jobs whereas it was expected to gain 40000 jobs for the month of march which is again concern for the US recovery. The initial jobless claims also decreased by 6000 from 445,000 to 439,000 beating expectation which was at 440,000. On Friday, the US Labor Department said employers had created 162,000 new jobs in March, the highest monthly number since March 2007 which again a positive news for the US economy.
The recent indicators reflect the steady and more positive recovery coming for the global economy which can improve the oil consumptions. The US crude oil inventories also showed a sharp fall from 7.3m barrels to 2.9m barrels however above expectation of 2.4m Barrels. Other reasons for the commodities price rise is the European Union’s bailout plan for Greece which again can boost consumption overall. The Weak dollar is also contributing towards the commodity price rise.
From the technical point of view, it has broken the resistance of 82.84. The next resistance can be at 92.15 as it has crossed the 38% of the upward movement. On the downside the 75.03 can be the support for the month, if it goes below then support can be placed at its can go up to 70.83.The US Crude oil inventory data and the unemployment data to be released today should be watched out which could direction on the rising oil prices. The Monetary Policy Committee (MPC) and the Bank of England’s (BOE) Interest rate statement for GBP which is expected to boost the GBP currency can also be a gain for the overall consumption.
Mohammed Rabbani
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