Crude oil price stabilizes as OPEC+ weighs supply cuts
European stocks and American futures rose as the market appeared to ignore the spreading of Coronavirus disease. The disease has killed at least 106 people and infected more than 4,500 according to Chinese health officials. In Europe, Stoxx 50, DAX, and CAC 40 rose by 15, 40, and 25 points respectively. In the United States, futures tied to the Dow and S&P500 rose by 134 and 20 points respectively. This is partly because of corporate earnings. Apple will be the company to watch today. Lockheed Martin reported a 10% increase in revenue while Xerox reported better-than-expected results. However, 3M and Harley-Davidson reported disappointing earnings.
The price of crude oil remained at a four-month low as OPEC members started talking about supply cuts. The members are deliberating about the best way to handle the current rout in oil prices. The price has dropped by more than 15% since its January peak. The decline is partly because of the ongoing Coronavirus crisis. The theory is that the disease will have an impact on the global economy. S&P Global has already hinted that the disease will dampen China’s growth by more than 1.2% this year. OPEC+ leaders are considering cutting oil production more or extending the current cuts to the end of the year.
The US dollar strengthened ahead of the FOMC decision tomorrow. The members are expected to leave rates unchanged and hint at their actions for the rest of the year. Today, the market received the durable goods orders for the month of December. The durable goods orders rose by 2.4%, which was higher than the November decline of 3.1%. The core durable orders declined by -0.1%, which was a slight improvement from the previous decline of -0.4%. Goods orders non-defense ex-air declined by -0.9% in December.
The EUR/USD pair declined to an intraday low of 1.1000. This was the lowest level since November 28. This is a significant low from January’s high of 1.1240. The price is below the 14-day and 28-day Adaptive Moving Averages. The price is also below the Ichimoku cloud. The RSI and the two lines of the Stochastic oscillator have been moved to the oversold level of 30. The pair may remain at the current support level ahead of the Fed decision tomorrow.
The AUD/USD pair declined to an intraday low of 0.6733. This was the lowest level since October 21. It is also lower than January’s high of 0.7030. The price is below the 14-day and 28-day exponential moving averages. The RSI has moved below the oversold level of 30 while the momentum indicator has been falling. The pair may continue moving lower ahead of the Fed decision and Australian CPI data tomorrow.
The XTI/USD pair remained at the lowest level since October 10. The pair is trading at 53.45, which is slightly above the day’s low of 52.12. The price is along the 14-day exponential moving averages and slightly below the 28-day EMA on the four-hour chart. The RSI has moved from a low of 17 to above 36 while the signal line and main lines of the MACD are making a crossover. The pair may have bottomed, which could see it rise as OPEC+ leaders start talking about supply cuts.