A slightly softer session yesterday for Europe’s markets, though the FTSE100 once again outperformed as oil prices continued to make headway gaining a foothold above the $50 a barrel level and closing at 10 month highs.
While oil inventories still remain at elevated levels continued supply disruptions in Nigeria, have sent output to a 20 year low and this is helping underpin prices. The third successive weekly draw in a row has also helped sustain the uptrend for oil prices which has been in place now for nearly 5 months.
With the US dollar also on the weak side there appears to be little in the way to stop the upward momentum behind the move higher in the oil price.
This US dollar weakness has also had another positive side effect, pushing US markets back close to their all-time highs, as the prospect of a US rate rise gets pushed further out towards the end of the year.
Concerns about the Chinese economy also weighed on sentiment after disappointing trade data while there still appears to be no signs of any significant pick up in inflationary pressures either as the latest May CPI data slipped back to 2%, while factory gate prices declined 2.8%. A slightly weaker CPI number reflected a lower than expected rise in food prices as evidence grows that the recent stimulus efforts of Chinese policymakers may well be wearing off.
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