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US market attempts new highs despite oil plunge, UK election in focus

By Margaret Yang, CMC Markets

The WTI Crude oil price plunged nearly 5% overnight to US$ 45.8 area this morning, as the US DoE data indicated a surprising surge in US commercial inventory.

Crude oil stocks climbed 3.29m barrels over the last week, comparing to the market’s expectation of a 3.5m-barrel drop. Glut concerns hammered the oil price and led to a plunge in the energy sector (-1.48%).

Technically, the WTI oil price is still in a downtrend, with both SuperTrend (2, 10) and the 10-Day Simple Moving Average line remaining bearish. Its near-term support levels could be found at around US$44.9 and US$42.9 respectively.

The US equities indices attempted record highs, despite weak performance in the energy sector. The US dollar index rebounded mildly, to the 96.7 area, after touching a key support level of 96.50.

European equity markets, on the other hand, closed broadly lower due to ‘risk-off’ sentiment ahead of the ECB meeting and the UK general election today. The likelihood of a change in the ECB’s interest rate tonight remains low, considering the backdrop of weak inflation and uncertainty over Britain’s political outlook. What matters is Draghi’s forward guidance of the central bank’s monetary policy, which will give direction to the euro for the rest of the week.

The voting in the UK election will start at 2pm Singapore time and an exit poll will come out at around 5am tomorrow morning. Volatility in major FX pairs – including USD/JPY, GBP/EUR, GBP/USD – is likely to pick up when the vote counting takes place tomorrow morning. Traders are advised to use Guaranteed Stop Loss Orders (GSLO) to protect their outstanding positions, in case of unexpected volatility.

UK election timetable (in Singapore time)

8th June 17 (Thursday)

  • Polling stations open across UK from 2pm to 5am (+1D) SGT

9th June 17 (Friday)

  • An exit poll at 5am SGT gives the first indication of which way the wind is blowing
  • Counting takes place overnight, with the first seat to declare before 7am SGT
  • If it’s an easy victory for one side, a result could be known by 10am or 11am SGT
  • If it’s close, there could still be uncertainty into the afternoon

Crude Oil West Texas – Cash

Margaret Yang Yan, CFA, is a market analyst for CMC Markets Singapore.