- The oil price has extended its recovery above $73.20 as fresh supply cuts would impact the demand-supply parity.
- Higher odds of a stable Fed policy and a recovery in Chinese factory activity are supporting the oil price.
- The investing community is divided between a higher United States Unemployment Rate and higher payroll additions.
West Texas Intermediate (WTI), futures on NYMEX, rebounded firmly after defending the downside near $72.22 in Asia. The oil price has extended its recovery above $73.20 in Europe as the announcement of fresh cuts in oil production solely by Saudi Arabia is going to tweak the current supply-demand mechanism.
On the weekend, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said on Sunday, “Saudi Arabia to make extra 1 million b/d output cut from July.” He further added the Kingdom will extend its 500k barrels per day (b/d) voluntary cut until the end of 2024.
The continuous decline in oil prices by the oil cartel in a way to provide cushion to energy prices indicates that the oil demand outlook is extremely bleak and back-to-back supply cuts are the only method for supporting prices.
In China, recovery in factory activity communicated by IHS Markit through Caixin Manufacturing PMI has fueled some optimism among investors. The economic data managed to defend the 50.0 threshold and landed at 50.9, higher than the consensus and the prior release of 49.5. Investors should note that China is the largest importer of oil in the world and higher manufacturing activity in China strengthens the oil demand outlook.
Meanwhile, the US Dollar Index (DXY) is hovering near its intraday high around 104.32 as hawkish Federal Reserve (Fed) bets are consistently providing the required support. The investing community is divided between a higher United States Unemployment Rate and higher payroll additions. According to the CME Fedwatch tool, more than 86% of the chances are in favor of a stable interest rate decision.
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 edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.