Crude falls as US rig count rises for eighth week
The price of crude oil declined in early trading as investors reacted to the rising number of oil rigs in the United States. In total, the number of oil and natural gas rigs increased by 18 to 424. In the Permian Basin, the number of rigs increased by the biggest number since the pandemic started. Oil rig count increased by 13, according to Baker Hughes. This is happening as shale producers rush to take advantage of high oil prices with Brent trading at $54.68 and the West Texas Intermediate (WTI) trading at $52.03.
The Chinese economy continued its recovery in the fourth quarter, helped by rising external demand. According to the latest data by the government, the economy increased by 2.6% after rising by 2.7% in the previous quarter. This increase was lower than the expected 3.2% On an annualised basis, the economy expanded by 6.5% after rising by 4.9% in the third quarter. This expansion was mostly due to stronger external demand. In December, industrial production increased by 7.3% while retail sales rose by 4.3%.
The market will see lower volume today due to the absence of US investors since the country will be celebrating Martin Luther King day. Nonetheless, there will be several key events to watch, including a speech by Governor Andrew Bailey of the Bank of England (BOE). In his speech, he will likely address the issue of negative rates as the economy continues to deteriorate. In Japan, the bureau of statistics will publish its preliminary industrial production and capacity utilization. In Italy, we will receive the latest CPI data.
The EUR/USD is trading at 1.2082, which is significantly lower than this year's high of 1.2350. It is also slightly higher than the intraday low of 1.2065. Still, the price is slightly below the two moving averages and above the 38.2% Fibonacci retracement. It also had a bearish breakout last week. Therefore, the trend will likely remain bearish, with the next key support being the 50% retracement at 1.1947.
The AUD/USD pair is little changed today after mixed economic data from China. The pair is trading at 0.7700, which is below the year-to-date high of 0.7780. On the four-hour chart, the 28-day and 14-day moving averages have made a bearish crossover. Also, the Relative Strength Index (RSI) has continued to decline while the pair has formed a head and shoulders pattern. Therefore, the pair will likely continue falling as bears target the next support at 0.7650.
The GBP/USD pair is little changed today ahead of Andrew Bailey's speech. It is still hovering near the highest level since April 2018. On the daily chart, it is between the ascending channel. It is slightly higher than the 25-day and 15-day moving average. Therefore, this week, the pair may resume the downward trend as bears target the lower side of the channel.