Oil prices have recaptured all of yesterday’s losses, likely driven by positive news from the UK regarding Brexit. With inventory data delayed due to the holidays, markets are awaiting this afternoon’s API report to validate the fundamental direction of the market. This morning crude oil is trading at $55.41, up $1.47 (+2.7%).
Fuel prices are also moving higher. Diesel prices are up quite a bit this morning, with prices trading at $1.8847, a gain of 4.1 cents (+2.3%). Gasoline prices are trading at $1.4851, lagging the market with just 1.5 cents (1.0%) gains.
Markets are moving higher thanks to positive economic data from China, which posted the fastest growth in its services industry in months. While growth in the services industry is a positive sign, it’s manufacturing that will be the bellwether for US-China trade impacts. Of course, President Trump also recently commented that he would take a tougher stance on China in his second term, indicating that a deal may be years away if Trump is re-elected.
Over in the UK, Parliament chose to defy Prime Minister Boris Johnson by voting to take over the Parliamentary agenda so they can mandate that Brexit includes a deal with the EU. A no-deal Brexit would create economic uncertainty for European businesses, exacerbating current economic concerns.
In the vote, 21 members of the Johnson’s Conservative party rebelled and voted to block Johnson’s approach, resulting in their removal from the party and eliminating the Conservative party’s majority in Parliament, adding even more uncertainty. Prime Minister Johnson is expected to seek an early election, which would serve as a de facto referendum on whether the UK truly supports a possible no-deal Brexit. For the global economy, markets are hoping that a Brexit deal is reached that will provide certainty through the transition. For now, though, there’s a lot of uncertainty regarding whether Parliament will mandate a Brexit deal and whether Boris Johnson will push for early elections to strengthen his political mandate.
Hurricane Dorian has made the turn northward after stalling over the Bahamas for 18 hours, and the storm’s path now brings it dangerously close to the Southeastern coast. The storm has been classified as a Category 2, a status likely to hold over the next few days. Dorian remained far enough off the Florida coast to minimize the destructive impacts, but the storm will pass much closer to Georgia, South Carolina and North Carolina in the coming days. The storm is forecast to move at a crawl, dumping rain along the Southeast through Friday.