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The SET pushed higher along the trendline resistance of the ascending wedge chart pattern, to close at a 52-week high of 1,552.64 on Thursday, up 2.24% for the holiday-shortened week, as crude oil prices continued to rebound. Since August 1, the SET index has re-coupled with Brent crude prices, but how long this will last is anyone's guess. A series of bomb blasts struck at least five tourism-heavy areas in Thailand on Friday, killing at least four people and injured dozens, could be a wild card when the SET reopens for trading on Monday.
The Bank of Thailand (BoT) told Reuters on Monday that tourism has been one of the few bright spots in the economy, and government spending on big ticket infrastructure should give a jolt to the sluggish economy later in the year. The BoT has forecasted economic growth of 3.1% this year, with exports contracting 2.5%. The University of the Thai Chamber of Commerce
(UTCC) sees a rosier Thai outlook, as the university raised its forecast for GDP growth to 3.3% from an earlier 3%, citing accelerated investment by the government and political stability after the peaceful referendum, according to the Bangkok Post.
The USD/THB exchange rate was quoted at 34.767 baht per dollar on Friday, down 0.89% for the week, while the
THB/JPY printed at 2.9136 yen per baht, up 0.39% for the week. The dollar turned lower after a weak U.S. retail sales report, which prompted the Federal Reserve Bank of New York to trim its U.S. GDP forecast for the third-quarter of 2016 to 2.4% from the previous 2.6%. The
USD/THB technical support is at 34.80 baht per dollar, while the
THB/JPY technical resistance is at 3.07 yen per baht.
The Thailand 10-year bond yield jumped 2.48% for the week, to close at 2.07% on Thursday. The yield spread between the Thailand 10-year bond and the benchmark U.S. 10-year Treasury Note, yielding at 1.51% on Friday, widened to 0.56 percentage points.
The spot WTI crude oil spot price skyrocketed 6.44% for the week, to close on Friday at $44.49 per barrel, while the Brent crude price jumped 6.19% for the week to close at $47.17 per barrel, following bullish comments from Paris-based International Energy Agency
(IEA) and Saudi Energy Minister Khalid al-Falih on Thursday, which triggered fund buying and some algorithmic trades. Earlier in the week, crude oil prices were bearish and ready to fall as the weekly report from the Energy Information Administration
(EIA) had a larger-than-expected increase in U.S. crude oil inventory.
The EIA weekly U.S. oil inventory report on Wednesday showed another increase of 1.1 million barrels to 523.6 million barrels, excluding strategic inventories, in the week ending August 5, compared to S&P Global Platts analysts’ expectations for a drawdown of 1.75 million barrels. The American Petroleum Institute (API) inventory data on Tuesday reported a U.S. crude inventory increase of 2.1 million barrels for the week.
There was another large decline last week in U.S. gasoline supplies of 2.8 million barrels, while distillate stockpiles, including jet fuel, diesel fuel and heating oil, decreased by 2.0 million barrels, according to the EIA. Analysts were expecting a drawdown of 1.6 million barrels of gasoline stocks and an increase of 400,000 barrels for distillates.
Separately, the EIA said weekly U.S. crude oil production dropped another 15,000 barrels per day (bpd) for the week ending August 5, 2016, to 8.445 million bpd. Weekly U.S. crude oil output has fallen about 12.12% from the peak level of 9.61 million bpd during the week ending June 6, 2015. Houston-based oilfield services company Baker Hughes Inc. said on Friday that the U.S. oil rig count was up another 15 from the previous week, to 396, compared to 316, when the rig count hit the low on June 6, 2016.
The IEA said on Thursday that their balances show essentially no oversupply during the second half of the year because producers outside the Organization of the Petroleum Exporting Countries (OPEC) cut back their production and global demand for crude oil remains healthy, according to the Wall Street Journal. From the IEA website however, the IEA said in their August 11, 2016 World Oil Demand report that global oil demand growth is expected to slow from 1.4 million barrels a day in 2016 to 1.2 million barrels a day in 2017, as underlying support from low oil prices wanes.
In the past several weeks, hedge funds and other big speculators have been dumping crude oil amid worries about oversupply and rising stockpiles of gasoline despite the peak summer driving season in the United States, according to the weekly Commitments of Traders (COT) reports from the U.S. Commodity Futures Trading Commission (CFTC).
Separately, Saudi Energy Minister Khalid al-Falih said on Thursday that OPEC members and non-members would discuss the market situation, including any action that may be required to stabilize prices, during an informal meeting on September 26-28 in Algeria. Everyone should be skeptical though, as Saudi Arabia and Iran are now pumping crude oil at near record levels, while U.S. producers have brought 80 idle oil rigs back online since the rig count hit the low at 316 on June 6, 2016. |
