OIL: Crude Continues Sharp Sell Off On Demand Concerns, Key Data Out Later
Oil has continued to sell off during today’s APAC session after falling around 3% on Tuesday on continued concerns regarding the impact of US trade policy on global energy demand and that OPEC will decide on another outsized output increase when it meets on Monday. Following soft US consumer confidence and Dallas Fed data, Q1 GDP & core PCE prices later today will be monitored closely for any signs of weakening growth related to tariffs. Today’s China manufacturing PMI was lower with export orders down sharply in line with ship-tracking of China-US flows.
- WTI has fallen below $60/bbl today and is currently down 1.3% to $59.63 to be down 16% in April, worse than April 2020. It reached $59.56, the lowest since April 11, but still above initial support at $58.29. The USD index is down slightly.
- Brent breached $63/bbl earlier in the session and is now 1.0% lower at $62.63, holding above support at $61.51. It is down 15.5% this month.
- China’s official manufacturing PMI for April fell to 49.0 from 50.5, below expectations, while the Caixin PMI decreased to 50.4 from 51.2, above consensus.
- Bloomberg reported that there was a US crude inventory build of 3.8mn barrels last week, according to people familiar with the API data. Products continued to destock with gasoline down 3.1mn and distillate 2.5mn. The official EIA data is out today.
- Later US Q1 GDP & employment costs, March core PCE prices, April MNI Chicago PMI & ADP employment print. Also preliminary April euro area CPI, Q1 GDP including Germany, France & Italy, German March retail sales & unemployment are released. BoE’s Lombardelli speaks.
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EURUSD TECHS: MA Studies Highlights A Dominant Uptrend
- RES 4: 1.1083 High Oct 2 2024
- RES 3: 1.1040 High Oct 4 2024
- RES 2: 1.0961 76.4% retracement of the Sep 25 ‘24 - Feb 3 bear leg
- RES 1: 1.0861/0955 High Mar 21 / 18 and the bull trigger
- PRICE: 1.0837 @ 06:17 BST Mar 31
- SUP 1: 1.0733 Low Mar 27 and a key short-term support
- SUP 2: 1.0649 50-day EMA and a short-term pivot level
- SUP 3: 1.0602 Low Mar 5
- SUP 4: 1.0548 50.0% retracement of the Feb 3 - Mar 18 bull run
Recent weakness in EURUSD appears to have been a correction and the trend condition remains bullish. MA studies are in a bull-mode position highlighting a dominant uptrend. 1.0733, the Mar 27 low, marks a key near-term support. A move through it would confirm a clear breach of the 20-day EMA and allow for a deeper correction towards the 50-day EMA at 1.0649. Key resistance and the bull trigger is at 1.0955, the Mar 18 high.
LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 31-Mar | 700 | DE | Import/Export Prices / Retail Sales |
| 31-Mar | 900 | DE | State-level Flash CPI |
| 31-Mar | 1000 | IT | HICP (p) |
| 31-Mar | 1300 | DE | HICP (p) |
| 01-Apr | 815 | ES | S&P Global Manufacturing PMI |
| 01-Apr | 845 | IT | S&P Global Manufacturing PMI |
| 01-Apr | 850 | FR | S&P Global Manufacturing PMI (f) |
| 01-Apr | 855 | DE | S&P Global Manufacturing PMI (f) |
| 01-Apr | 900 | EU | S&P Global Manufacturing PMI (f) |
| 01-Apr | 920 | EU | ECB's Cipollone At Croatian National Bank Meeting |
| 01-Apr | 1000 | EU | HICP (p) / Unemployment |
| 01-Apr | 1330 | EU | ECB's Lagarde At AI Conference |
| 01-Apr | 1730 | EU | ECB's Lane At AI Conference |
| 02-Apr | 1130 | EU | ECB's Schnabel At SciencesPo Conference |
| 02-Apr | 1505 | EU | ECB's Lane At AI Conference |
EQUITIES: Goldman Cut S&P 500 Forecasts
Goldman Sachs have reduced their “S&P 500 3-month and 12-month return forecasts to -5% and +6% (previously +0% and +16%). Based on market prices at the end of last week, these suggest S&P 500 index levels of roughly 5,300 and 5,900, respectively”.
- They note that “higher tariffs, weaker economic growth, and greater inflation than we previously assumed lead us to cut our S&P 500 EPS growth forecasts to +3% in 2025 (from +7%) and +6% in 2026 (from +7%). Our new EPS estimates are $253 and $269, respectively. These estimates are below both the top-down strategist consensus and the bottom-up consensus of equity analysts”.
- Their economists “estimate a 35% probability that the U.S. economy enters a recession during the next 12 months”.
- They “continue to recommend investors watch for an improvement in the growth outlook, more asymmetry in market pricing, or depressed positioning before trying to trade a market bottom”.
- Although their “sentiment Indicator has declined sharply during the last few weeks (to -1.2), it remains above levels reached at the troughs of other major sell-offs during recent years (-2.0 or lower)”.
