Oil prices trended lower this Thursday, extending its losing streak for the sixth consecutive session, primarily on the back of resurgence of oversupply worries in the already saturated oil markets.
The latest EIA inventory report showed that crude reserves in the US expanded by 1.671 million barrels in the period ending July 22, while the market had forecast a drop of 2.250 million barrels.
Additionally, increasing gasoline inventories coupled with rising US oil production levels also exacerbated the pain in the black gold, dragging it to fresh three-month troughs. Many analysts now speculate that this may be the resumption of the broader downtrend in the prices.
Besides fundamentals, the drop in the oil prices can be also justified by the declining trend in the US treasury yields over various time horizons, with the 30-year one highly correlating to the oil price action. The tumbling treasury yields amid an ambiguous Fed outlook on the interest rates for this year, resulted in heavy selling in the greenback across the board. Hence, it can be seen that oil failed to benefit from a weaker US dollar, reinforcing the fact that both the oil and USD index have been out of sync.
While a sudden pick-up in volatility witnessed today amid poor risk sentiment also dented the sentiment around the risk assets such as oil. The CBOE Volatility Index (VIX) rises +0.50% to trade near 13 levels.
Markets now await the US GDP report and rigs count data due out tomorrow for further momentum in the oil prices.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD turns negative near 1.0760
The sudden bout of strength in the Greenback sponsored the resurgence of the selling pressure in the risk complex, dragging EUR/USD to the area of daily lows near 1.0760.
GBP/USD comes under pressure and challenges 1.2500
GBP/USD now rapidly loses momentum and gives away initial gains, returning to the 1.2500 region on the back of the strong comeback of the US Dollar.
Gold retreats from highs on stronger Dollar, yields
XAU/USD trims part of its initial advance in response to the jump in the Dollar's buying interest and the re-emergence of the upside pressure in US yields.
XRP tests support at $0.50 as Ripple joins alliance to work on blockchain recovery
XRP trades around $0.5174 early on Friday, wiping out gains from earlier in the week, as Ripple announced it has joined an alliance to support digital asset recovery alongside Hedera and the Algorand Foundation.
Week ahead – US inflation numbers to shake Fed rate cut bets
Fed rate-cut speculators rest hopes on US inflation data. After dovish BoE, pound traders turn to UK job numbers. Will a strong labor market convince the RBA to hike? More Chinese data on tap amid signs of slow Q2 start.