Crude oil price falls after OPEC releases monthly report
The price of crude oil declined today after Organization of Petroleum Exporters (OPEC) released its monthly oil market report. In the report, the organization said that demand will drop this year by almost 1 million barrels a day. Production outside OPEC will increase by 2.1 million barrels a day to 64.2 million barrels. An increase in production coupled with a decrease in demand has caused the price of crude oil to decline by more than 30% from October’s highs. In recent weeks, the price had stabilized a bit as Russia and Saudi Arabia start reducing supplies.
The sterling rose today as hopes for a soft Brexit increased. This is a day after Theresa May survived a vote of no confidence from parliament. While the path to a deal acceptable by Brussels and the UK parliament is still complicated, investors hope that her victory could help lead to a deal. Today, Labor leader, Jeremy Corbyn asked May to end the possibility of a no deal Brexit.
The euro was relatively unchanged against the USD after Eurostat released the inflation numbers. In December, the headline CPI rose at an annualized rate of 1.6%, which was in line with consensus but lower than November’s increase. On a MoM basis, the consumer prices were unchanged. The core CPI, which excludes volatile food and energy prices remained unchanged at 1%.
Global stocks were mixed as traders started to worry about trade. While Chinese premier, Liu He will visit Washington later this month, investors are concerned about the latest news. Yesterday, the United States announced that it will sue embattled Huawei for theft of intellectual property. In China, the Shanghai composite and Hang Seng declined by 10 and 150 points respectively. In Europe, the Stoxx and DAX declined by 50 and 10 points respectively. In the US, Dow and S&P 500 futures declined by 105 and 12 points respectively. This decline was also attributed to the weaker earnings from Morgan Stanley. The bank reported revenues of $8.55 billion, which was lower than the expected $9.3 billion.
The EUR/USD pair gained slightly today, ending a sharp decline that started on Thursday last week. The pair reached an intraday high of 1.1406. On the hourly chart, the Average Directional Index is at 19, which is an indication that the new upward trend is not likely to last. This is also evidenced by the low volumes and the momentum indicator as shown below.
The GBP/USD pair rose to an intraday high of 1.2910. This price is higher than Tuesday’s low of 1.2422. On the four-hour chart below, the pair’s current price is above the three-week and six-week EMAs while the RSI has remained relatively stable at 58. At this point, the pair could move in either direction as traders continue to receive information on Brexit.
The price of US crude declined today after OPEC released its monthly report. The XTI/USD pair dropped to a low of 51.40, which is still higher than this week’s low of 50.58. The price is also lower than the 21-day and 42-day EMAs while the tick volumes are still low. This is an indication that the downward trend is not strong enough. More downward movements will likely lead the pair to the important support of 50.