Oil slides as investors worry about trade and rising inventories
The price of crude oil continued declining today as investors continued to worry about global trade issues and the rising inventories in the US. Yesterday, data from the US showed that the inventories rose by more than 4.7 million barrels in the past week. This was slightly lower than previous week’s 5.43 million barrels. It was also much lower than the expected drawdown of more than 599K. The drop comes despite the mounting geopolitical tensions in the Middle East.
Sterling extended its losses as pressure continued on Theresa May to resign. The crisis comes at a time when she is preparing to table her Brexit deal to parliament. Both conservative and Labor leaders have called her proposals dead on arrival. Today, the government published the timetable for future business, with no time set for the debating of May’s proposal. Investors are now focusing on who will be the next prime minister, with some betting on Boris Johnson. With the divisions in parliament, it is unlikely that the next prime minister will be able to find a Brexit solution.
The euro rose slightly after mixed economic data from Europe. In Germany, the country’s GDP in the first quarter expanded by an annualized rate of 0.6%. This was in line with expectations. At the same time, the manufacturing PMI in April dropped to 44.3 from the previous 44.4. The services PMI decreased from the previous 55.7 to 55.0 while the composite PMI increased slightly to 52.4 from the previous 52.2. The ifo business climate index declined from 99.2 to 97.9. In the EU, the manufacturing PMI declined to 47.7 while the services PMI declined from 52.8 to 52.5. On a positive note, the French manufacturing PMI of 50.6 was better than the expected 50.0.
The EUR/USD pair rose slightly after mixed economic data from Europe. The pair rose from a low of 1.1128 to a high of 1.1143. On the hourly chart, the price is slightly below the 50-day and 25-day moving averages. Overall, the pair is on a downward trend while the accumulation/distribution indicator has started to move up slightly. The pair is likely to resume the downward trend to retest the important support of 1.1100.
The XBR/USD pair continued the declines started last week when the pair made a double top pattern. Today, the pair reached an intraday low of 68.29, which was below the important support of 68.50. On the hourly chart below, the price is below all the major short and medium-term moving averages. The RSI has also dropped below the oversold level of 30 while the triple exponential average continued to decline. The pair is likely to continue moving lower although this could change ahead of the OPEC meeting in June.
The GBP/USD pair continued to drop as the political environment in the UK continued to worsen. The pair reached a low of 1.2605, which was the lowest level since January 7. On the eight-hour chart below, the price is below the 25-day and 50-day moving averages. The triple exponential moving average has dropped to the lowest level this year while the RSI has dropped to below 30. The pair will therefore likely drop, at least until Theresa May resigns.