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Oil Edges Higher As Producers Conclude Meeting

Published 08/08/2017, 12:33
Updated 09/07/2023, 11:31

The quiet summer period is very much upon us and markets are currently trading relatively flat as a result on Tuesday. Oil continues to be a little lively though as we await inventory numbers later in the session and the conclusion of a two day meeting in Abu Dhabi.

Earnings season has been a key focal point for traders in recent weeks, with the stellar performances in the US providing the catalyst for new record highs in equity markets. But with many of the largest companies having now reported, attention is slowly shifting back towards central banks and what we can expect from them in the coming months.

USD remains soft despite jobs report boost

The jobs report on Friday put the spotlight back on the Federal Reserve but once again, the report ticked every box except on wages, a crucial component of future inflationary pressures. We heard from two policy makers at the Fed over the last 24 hours and, as is to be expected from two of the central banks most dovish policy makers, there was no sign of either putting forward the case for higher interest rates.

The Fed may find raising interest rates again this year more challenging than they did the previous two occasions and that’s what markets are clearly anticipating. The US dollar is trading softer again on Tuesday after having caught a nice bid following Friday’s jobs data, with traders focusing on jobs gains and unemployment over wages. Still, the dollar index continues to language around its lowest levels since the start of 2015 and a move below the 92-93 area could be very bearish for the greenback.

DXY Daily Chart

Brent and WTI higher ahead of API data and Abu Dhabi outcome

While JOLTS job openings is the only notable US economic release today, we will get some oil inventory data from API later in the session which should be of interest. Oil is trading a little higher in today’s session, with Brent crude pushing the highs of the last week – around $53 – a break of which bring May’s highs around $55 into focus.

API Weekly Crude Oil Stock

We should also hear from OPEC and non-OPEC producers later in the day after their meeting in Abu Dhabi, in which compliance with the cuts was discussed having slipped recently. Any signs that the agreement is facing difficulties could be quite bearish from Brent and WTI crude.

Disclaimer: This article is for general information purposes only. It is not investment advice, an inducement to trade, or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Ensure you fully understand all of the risks involved and seek independent advice if necessary. Losses can exceed investment.​

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