Crude price unchanged as IEA warns of oversupply
The price of crude oil was relatively unchanged today after the International Energy Agency (IEA) released its monthly report. The France-based agency said that oil production from the US and other non-OPEC members will outpace demand. The agency expects the non-OPEC oil supply growth will pick up from 2 million barrels a day last year to more than 2.1 million barrels per day this year. This situation will reduce the “call” on OPEC to 28.5 million barrels per day. This is higher than the December production of 29.4 million barrels per day. This report came a month after OPEC and its allies agreed to cut production further until March this year.
The Australian dollar rose today as the market continued to react to the signing of the US-China deal. The deal has lowered trade tensions between the two countries. This is a positive move for Australia, which is a leading beneficiary of a stable global economy. Meanwhile, the market is watching the ongoing fires and its impact to the economy. According to the Wall Street Journal, the country has suffered a catastrophic drought that has affected production of key commodities like gold and coal. Part of the reason is that most miners are facing a severe water shortage. For example, Glencore needs 40 litres of water a second to keep its CSA mine open for business.
The euro and sterling rose today as the market reacted to a number of important data from the region. From the UK, data from the Royal Institution of Chartered Surveyors (RICS) released the house price balance for December. The data showed that the balance declined by 2% after declining by 11% in November. The balance has been negative since August 2018. Car registrations in the country declined by -4.9% in December after rising by 9.3% in November. In Germany, the number of car registrations declined by 5.3% after rising by 5.1% in the previous month. The country’s consumer prices were unchanged in December. The headline and HICP remained unchanged at 1.5%.
The United States released initial jobless claims data which came in at 204k, better than the expected 216k. Continuing jobless claims improved to 1,767k, which was better than the previous 1,804k. The Philadelphia Fed manufacturing index of 17.0 was better than the expected 3.8. This was the highest level since June last year. In addition, retail sales rose by 0.3% as was expected.
The EUR/USD pair rose to an intraday high of 1.1163, which is along the 50% Fibonacci Retracement level. The price is above the 14-day and 28-day exponential moving averages. It appears to have found some resistance at the current level. This is also evidenced by the sideways movement of the signal line of the MACD. The pair is likely to break out higher.
The XTI/USD pair was relatively unchanged after the IEA report. The pair is trading at 57.88, which is close to the lowest level since December 11. The price is below the Ichimoku Cloud and along the Tenkan-Sen line. The RSI has remained slightly above the oversold level of 30. The pair seems to be finding support at the current levels.
The GBP/USD pair rose slightly today after positive data from the UK. The pair reached a high of 1.3065, which is the highest level since Friday last week. The pair has slowly risen this week from a low of 1.2956. The price is slightly above the 14-day and 28-day EMA. The price is also above the important resistance line shown in white below. There is a likelihood that the pair will continue moving to 38.2% Fibonacci Retracement at 1.3080.