News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bearish
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Bullish
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Overall quiet reaction from $AUDUSD to the #RBA rate decision Most notable update likely has to do with them letting the markets know that they could do more adjustments to bond purchases given rising yields But that may have already been priced in... https://t.co/rol1p1WcAw
  • RBA: Bond purchases brought forward this week to assist market -BBG #RBA
  • RBA: Lending conditions remain sound, important to remain so. Committed to 3-year target, will continue buys as needed -BBG
  • RBA: Board will not raise rates until CPI at target range, global bond yield swings have made other assets volatile. Prepared to make further adjustments to bond buys -BBG #RBA
  • RBA: $AUD remains un upper end of range of recent years, economic recovery well underway and stronger than expected. Committed to maintain highly supportive monetary conditions -BBG #RBA
  • RBA: Wage and price pressures expected to remain subdued, does not expect conditions met to raise rates until 2024. Economy still has considerable spare capacity -BBG #RBA $AUDUSD
  • RBA leaves 3-year yield target unchanged at 0.1% -BBG
  • 🇦🇺 RBA Interest Rate Decision Actual: 0.1% Expected: 0.1% Previous: 0.1% https://www.dailyfx.com/economic-calendar#2021-03-02
  • The bull flag pattern is a great pattern to add to a forex trader's technical arsenal. Explosive moves are often associated with the bull flag. Learn more about the bull flag pattern here: https://t.co/yOEvLjKnct https://t.co/AnwvjoT15Y
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Gold: -0.91% Oil - US Crude: -1.47% Silver: -2.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/hZiyf9sKbK
Oil Price to Stay Afloat as US Output Falls to Lowest Level Since 2018

Oil Price to Stay Afloat as US Output Falls to Lowest Level Since 2018

David Song, Strategist
Crude Oil Chart

Chart Created in TradingView

Oil Talking Points

The price of oil consolidates after clearing the April high ($29.13), but the ongoing contraction in US production may keep crude prices afloat even though the Organization of the Petroleum Exporting Countries (OPEC) continue to highlight the “surge in tanker demand, driven by low crude prices and a need to push out excess supplies amid concerns about the availability of onshore storage capacity.

Fundamental Forecast for Oil: Bullish

The price of oil holds near the May high ($34.81) despite an unexpected rise in US crude inventories, and the response by oil producers may continue to stabilize the energy market as US output falls to its lowest level since October 2018.

US crude inventories jumped 7928K in the week ending May 22 after contracting 4982K the week prior, and the slowdown in energy consumption looks poised to persist as OPEC’s Monthly Oil Market Report (MOMR) states that “in 2020, world oil demand growth isadjusted lower by 2.23 mb/d and is now forecast to drop by 9.07 mb/d.

OPEC report

The update argues that “the worst contraction in majoroil demand centers around the world is expected to take place in the 2Q20,” but the economic shock from COVID-19 may continue to drag on energy consumption as the global travel ban remain in place, while “industrial fuelsare also forecast to face pressure in response to reduced manufacturing activity compared with last year.”

In turn, OPEC and its allies may show a greater wiliness to extend the extraordinary measures taken in April as the group pledged to reduce oil output by 9.7 mb/d in May and June, and the ongoing contraction in supply may keep oil prices afloat amid the ongoing decline in US production.

Weekly US Field Production of Crude Oil

Recent figures from the US Energy Information Administration (EIA) showed field production narrowing to 11,400K from 11,500K in the week ending May 15 after hitting a record high (13,100K) earlier this year, and the decline in crude output looks poised to persist as Reuters reveals that Chevron, the second largest oil producer in the US, plans to cut up to 15% of its global workforce.

With that said, the ongoing slowdown in global production is likely to keep the price of oil afloat in June, but the gradual process of reopening the advanced economies may rattle crude prices amid the threat of a protracted recovery.

--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES