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Oil Fundamental Forecast – July 29. 2016

By:
Barry Norman
Published: Jul 28, 2016, 12:47 UTC

Crude Oil recovered 24 cents on the back of the lower dollar and weak prices to trade at 42.16 while Brent Oil added 17 cents to 44.08. Oil prices edged

Oil Fundamental Forecast – July 29. 2016

Crude Oil recovered 24 cents on the back of the lower dollar and weak prices to trade at 42.16 while Brent Oil added 17 cents to 44.08. Oil prices edged away from three-month lows supported by a weaker dollar, but concerns of ongoing oversupply weighed on markets and many traders are raising their bets on further price falls.

Brent hit its lowest level since May the previous day, while WTI hit its lowest level since April.

Traders said higher prices were partly a correction after the previous day’s sharp falls, and also reflected a dip in the dollar against other leading currencies away from March highs.

As oil is traded in dollars, a cheaper greenback makes fuel imports cheaper for countries using other currencies, potentially spurring demand.

Despite the slightly higher oil prices, analysts said the overall mood in oil markets had turned bearish.

“Ongoing fears of oversupply are encouraging hedge funds to liquidate their recent record bullish position; at the same time, we are also seeing a corresponding increase in speculative short positions,” said Matt Smith of US-based ClipperData in a note.

The U.S. Energy Information Administration reported an increase in crude oil inventories—the market was expecting a decline. According to the data released by the EIA at 10:30 AM EST on July 27, the crude oil inventories rose by 1.67 MMbbls (million barrels) in the week ending on July 22. The market was expecting a decline in the weekly crude oil inventory levels by 2.3 MMbbls, but the unexpected increase in inventories weighed on crude oil prices. Currently, crude oil is trading at the lowest level since April 19. It’s on its way to end the month in losses.

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Upcoming Economic Events that you should be monitoring:

Friday, July 29, 2016

Currency Name Volatility Previous Consensus
JPY BoJ Interest Rate Decision 3 -0.1 -0.2
JPY BoJ Monetary Policy Statement 3
EUR Gross Domestic Product YoY) 3 1.7 1.6
EUR Gross Domestic Product (QoQ) 3 0.6 0.3
EUR Consumer Price Index (YoY) 3 0.1
EUR Consumer Price Index – Core (YoY) 3 0.9

Government Bond Auctions

Date/Time Country Type

Jul 27 11:30 Germany Eur 1bn 2.5% Aug 2046 Bund

Jul 28 11:10 Italy Holds bond auction

 

 

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