Optimal Financial Management - Economic and Commodity Update 15th January 2015

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Optimal Financial Management  - Economic and Commodity Update 15th January 2015

Oil made a sharp comeback yesterday as US Crude saw a 6% gain overnight bringing the cost per barrel up to $48.06. Brent saw some relief too clawing back to $49.51 for the same period.

With many large firm analysts predicting Oil around $40 per barrel for the majority of the year it was a slight reprieve for energy firms and could show an indication that the late $40's to early $50's would be more accurate. With Saudi Arabia starting to be more positive with its engagements with its OPEC members we could see some effort to slow down production sooner than many predicted. With China stockpiling along with India and other South East Asian countries OPEC and the US will most likely prefer to stem the drop in prices at this time and look to a more solid price point.

Concerns over the price of copper were calmed as the metal nears 5 and a half year lows. Yesterday saw a 5.3% fall in overnight trading of the metal and concerns over supply and the reduced global growth outlook took investors by surprise. In its opening the commodity had regained 1.3% to reach $5,622.00 per tonne.

Europe is expected to open higher today after a very negative Wednesday which saw the major indexes perform poorly. Yesterday the ECB received word that their OMT program, in principle, would be legal under European Law. The move could see QE brought to the Eurozone as early as next month with many expecting some form of announcement next week. Currently the Euro is at 9 year low against the dollar after barely recovering from a low of $1.17 earlier this week. If some form of QE or monetary stimulus is not in place within the EU soon there is a possibility that the Euro will drop further until it is on par with the USD.

US Markets were muted after Retail Sales data showed consumers spent less in December than the year before. Down by 0.9% the market reaction was one of caution despite the positive news from Europe the fact that the World Bank had just downgraded its forecasts wore down on investors. With Oil showing stronger today and Europe fully digesting the news out of the ECB the US markets should open higher and as more companies start to report their earnings the sectors that have benefitted from lower oil prices should start to buoy up the markets.

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DISCLAIMER  The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Optimal Financial Management. All market data within this release is for your general information and enjoys indicative status only. Optimal Financial Management does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.