Oil price falls as OPEC+ puts pressure on cuts cheating
Crude oil price declined slightly as analysts started to worry about the upcoming OPEC+ meeting. According to Bloomberg, the key concern is that there are countries in the organisation who are cheating on the agreed supply cuts. Nigeria and Iraq have been accused of cheating and exporting more oil as prices rise. The risk for OPEC and all countries involved is that the surging oil prices could entice American shale producers to restart their wells. This will in turn lead to higher production at a time when demand is crawling back. Later today, we will receive the official inventories data from the United States.
The rally on the euro eased slightly even after positive data from the region. Data from Markit showed that the important services sector returned to growth in May. The services PMI rose from the record low of 12.0 to 30.5. This number is important because the services sector is responsible for more than 70% of the output. At the same time, the composite PMI rose from the previous 13.6 to 31.9. On a negative note, the PPI data and German employment numbers disappointed. The unemployment rate in Germany rose from the previous 5.8% to 6.3% while the unemployment change rose by 238,000. The PPI, which is an important measure of inflation, declined by 2.0% in April.
The British pound rose today after data from Markit showed that the services sector, which is responsible for 80% of the GDP increased in May. The PMI rose from the previous 13.4 to 29.0 which was the biggest bounce seen in years. According to Markit, the sector improved as more companies started to reopen their businesses. Still, the report showed that most companies were struggling because of weak demand. The composite PMI, which includes the manufacturing sector, rose from the previous 13.8 to 30.0. According to analysts, the biggest risk for the sterling is a no-deal Brexit as talks continue. Meanwhile, in the United States, data from ADP showed that the private sector shed more than 2.76 million jobs in May.
The EUR/USD pared some of the gains and is now trading at 1.1196, which is slightly below the day’s high of 1.1230. On the four-hour chart, the price is above the 100-day and 50-day exponential moving averages. The RSI has moved from the overbought level of 76 and is now at 69. Also, the signal and the histogram line of the MACD is above the neutral line. Therefore, the pair may still continue rising ahead of the ECB decision tomorrow.
The GBP/USD pair declined by a few pips as the previous rally took a breather. The pair is trading at 1.2568, which is slightly below the day’s high of 1.2600. On the four-hour chart, the price is slightly above the 61.8% Fibonacci retracement level. It is also forming a pattern similar to cup and handle, which means that the price may continue moving upwards as bulls attempt to test the upper side of the pattern at 1.2645.
The XBR/USD pair declined from an intraday high of 40.89 and is now trading at 38.90. On the four-hour chart, the price is slightly below the 50% Fibonacci retracement level and above the 50-day and 100-day exponential moving averages. Even with the decline, the price may resume the upward trend as investors anticipate an extension of the cuts at the upcoming meeting.
Futures tied to the S&P500 continued to rise as the size and scale of protests continued to decline. The index is trading at $3092, which is the highest it has been since March 5. On the four-hour chart, the price is above the short and medium-term moving averages while the momentum indicator has continued to rise. The price is also above the 61.8% Fibonacci retracement level. The pair may continue rising as bulls attempt to test the next resistance at $3200.