China’s GDP Stronger in Q3 – Will Risk Assets Benefit?

WTI crude Oil was going back and forth on Friday and the price action today is similar as well, since there is no real clarity at the moment. Keep in mind that crude Oil moves for many different reasons, especially right now, not the least of which is going to be the fact that OPEC has cut production by 2 million barrels per day. That does provide a little bit of a floor the market, but at the same time there are a lot of concerns out there about global demand.

Further clouding the picture is the fact that the US government has suggested that it was willing to buy crude oil at $80 a barrel to refill the Strategic Petroleum Reserve, which had initially been filled at about $9 a barrel. Ultimately, this is a market whcih will continue to be very noisy with all the elements affecting it right now, so I think you’re probably more likely than not going to see a situation where we are chopping back and forth on short-term moves, and therefore I think you got a scenario where there is a lot of volatility.

WTI Oil H4 Chart  – MAs Are Acting As Resistance

The Chinese GDP production report was released early today, showing that the Chinese economy is bouncing back in Q3, after a slowdown in Q2. This is a positive event for Oil, since China is a major importer and the economic slowdown in Q2 there was one of the major reasons for the decline in Oil in August.

China Q2 GDP Report

• China’s Q3 GDP 3.9% vs 3.3% expected
• Q2 Chinese GDP was 0.4%

This data had a delayed release until after the Communist Party National Congress.

Chinese Industrial Production Report

• Industrial production +6.3% y/y (expected +4.8%, prior +4.2%)
• Retail sales +2.5% y/y (expected 3.0%, prior +5.4%)
• Fixed investment +5.9% YTD y/y (expected +6.0%)
• Exports YoY in September +5.7% (USD terms) vs expected +4.0%,
• Exports in August were +7.1%
• Imports YoY +0.3% vs 0.0% expected
• Imports in August were +0.3%

US WTI Cude Oil Live Chart