Crude oil in bear territory after surprise jump in US inventories
The price of crude oil fell deep into the bear territory after the EIA released inventories data for the past week. Numbers showed that inventories rose by 2.35 million barrels. This was higher than the drawdown of 2.84 million that investors were expecting. It was the first report of an increase of inventory since June 12. Before this report, US inventories had dropped by almost 50 million barrels. Investors are still worried about the growing tensions in the Middle East and the likely slowdown of the global economy as trade wars persist.
In Wall Street, stocks recovered in the afternoon session after making sharp declines earlier in the day. Similarly, the government bond rally that was there in the morning session lost steam shortly before the markets closed. The S&P 500 ended the day 0.1% higher after falling by 2% earlier in the day. Nasdaq ended the day higher by 0.4% while the Dow lost just 0.1%. Earlier in the day, investors were worried about the global economy after three central banks – New Zealand, Thailand, and India – slashed interest rates. Earlier today, China released its trade data that showed a sharp increase of exports and a sharp decrease of imports. Exports rose by 3.3% while imports declined by 5.6%.
From a data standpoint, there will be no major data released today. In Europe, the European Central Bank (ECB) will release the economic bulletin. This is a document that contains the statistical data that policymakers use when setting interest rates. It also provides a detailed analysis of current and future economic conditions of the region. From the United States, the Labor Department will release the initial jobless claims, which are expected to remain unchanged at 215k.
The EUR/USD pair was relatively unchanged in overnight trading. As of this writing, the pair is trading at 1.1210, which is 40 pips below the weekly high of 1.1250. It is also slightly below the 50% Fibonacci Retracement level. It is also above the 25-day (red) and 50-day exponential moving averages. With no major data expected today, the pair could continue to consolidate along the current prices.
The price of Brent crude oil declined sharply to a low of $55.46. Since May, the price has dropped by more than 20%, which puts it in bear territory. On the daily chart below, the price is below the 50-day (blue) and 25-day (red) EMAs. The XBR/USD pair also appears to be forming an inverted cup pattern. The RSI has also dropped below the oversold level of 30. The price is slightly below the 23.6% Fibonacci Retracement level. Therefore, there is a likelihood that the pair will continue moving downwards to test the previous support of 50.
The price of gold continued moving higher, reaching a high of 1510. As of this writing, the XAU/USD pair is trading at the 1500 level, which is the highest level in more than a decade. On the daily chart, this price is above all the short, medium, and long-term moving averages. The RSI and the momentum indicators have moved sharply lower too. There is a possibility that the price will continue moving higher as global risks rise.