Jump to content

Crude oil on roller coaster: OPEC+ cuts ignite a five-week high, yet market speculation and USD strength inject volatility


Recommended Posts

Crude oil leapt to higher ground after the OPEC+ declared a production cut; he June OPEC+ meeting delivered a price reaction that had been foretold and the US dollar might weigh on oil if it keeps climbing.

 

original-size.webpSource: Bloomberg

 
Daniel McCarthy | Strategist, | Publication date: Monday 05 June 2023 

Crude oil opened at a five-week high on Monday after OPEC+ announced a reduction in the output target over the weekend that will take effect from the 1st of July.

The decision at the Vienna gathering of the Organisation of Petroleum Exporting Countries (OPEC+) comes after a similar move back in April that saw black gold race to a 6-month peak.

After that run-up, it collapsed to an 18-month low at the start of last month ahead of last weekend’s conclave. The price action so far today has been somewhat similar with an initial rally of over 4% from Friday’s close before giving up most of those gains.

Within OPEC+, Saudi Arabia will do most of the heavy lifting, lowering their production by a million barrels per day. This puts the largest oil-exporting nation at around 9 million barrels per day, down from circa 10.5 million barrels per day before the April cuts.

Russian production targets were left unchanged, and the United Arab Emirates (UAE) gained permission to add slightly while some African nations saw modest cuts and their output will be monitored.

The move had been telegraphed to some extent by the Saudi Arabia Minister of Energy Abdulaziz bin Salman.

Two weeks ago, he said, “speculators, like in any market, they are there to stay. I keep advising that they will be ouching. They did ouch in April. I don’t have to show my card, I’m not [a] poker player… but I would just tell them, watch out.”

The US dollar is also stronger to start the week after mixed jobs data on Friday that saw 339k jobs added in May according to the non-farm payrolls data. This beat the 195k anticipated and there was also an upward revision to the April figure to 295k from 253k.

However, the unemployment rate ticked up to 3.7% from 3.4% prior and above the 3.5% forecast.

There had been some commentary from a number of Fed speakers last week hinting that the bank might ‘skip’ a hike at the June 14th Federal Open Market Committee (FOMC) meeting.

We are now in the blackout period for committee members to be making public statements about policy until after the gathering. Without further guidance on Fed thinking, uncertainty and speculation might see a tick-up in volatility across markets, including oil prices.

WTI crude oil chart

 

original-size.webpSource: TradingView

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • image.png

  • Posts

    • Crypto trading is a bit complicated when it comes to understanding the dynamics in profit making. Some people are more inclined to technical analysis which of course has been the widely used trading tool but some are more inclined to fundamentals but sticking to fundamentals alone could be highly risky in my own opinion even though crypto is also financial instrument that often respond to news updates.  A blend of the two could provide a safety net for traders in minimizing losses compared to potential profit. The above case scenario is largely attributed to perp futures trading and other derivatives. TA and FA could also be very useful for spot trading but I feel timely listing of projects could largely determine one's profit from investing in a project. These may not be for all projects cos some are **** coins. This could be a personal perspective but I have noticed listing speed is also another important factor to consider along with project fundamentals when trading and if we are to include listing speed as a factor for choosing trade then it will affect our choice of trading platform cos some are more inclined to top cap projects while others are more inclined low cap gems.   My experience with ORDI has proven this trading skill rewarding. ORDI was first listed on Bitget before other exchange joined the listing party after it saw rapid adoption reflecting in it significant MCap growth. This chart should give us a glimpse of my experience with this strategy.
    • In a stunning display of market momentum, the PANDORA token, the first of its kind, has skyrocketed an astonishing 4872% from its introduction on February 2nd to February 7th. This remarkable performance has not only caught the attention of cryptocurrency enthusiasts but has also solidified PANDORA’s position as a groundbreaking asset in the digital currency landscape. Pandora's ERC-404 protocol revolutionizes the token landscape by seamlessly blending the qualities of ERC20 and ERC721 standards. This experimental mixed implementation enables persistent liquidity and non-fungibility for NFTs, unlocking a realm of possibilities previously unexplored. Adding to the excitement, Bitget Wallet is gearing up to introduce a specialized section dedicated to ERC-404 token market listings. This feature creates a hub for tokens that blend the best of both worlds—the liquidity of ERC-20s and the uniqueness of ERC-721 NFTs. I have come to believe that, the electrifying surge of PANDORA token and the innovative ERC-404 standard is not just a fleeting trend but a window into the future of cryptocurrency.
    • A significant turning point in the #PORTALxBitget collaboration is the listing of $PORTAL on Bitget through the Candybomb event, which opens up benefits and synergistic prospects like 1. Diversified Trading choices: Users now have access to a wide range of trading choices thanks to $PORTAL's listing on the exchange, including cutting-edge leveraged trading capabilities and spot trading. This gives customers the freedom to interact with $PORTAL in a way that suits their preferred level of risk and trading techniques. 2. Community Synergy: By uniting the exchange users and the pre-existing $PORTAL community, the Candybomb event stimulates community engagement. Through this synergy, a positive environment surrounding #PORTALxBitget may be developed, encouraging cooperation, information exchange, and sustained interest in the project. Could this recent collab stimulate the  stage for a fruitful and mutually beneficial relationship between #PORTAL and exchange.
×
×
  • Create New...
us