Last Friday, oil went down due to global surplus supply and strong dollar.
WTI decreased 0.9%, closed at $59.97.
In Asian session today, oil went sideway, as mixed events about Saudi Arabia’s outputs and tropical storm at Mexico Gulf. WTI plunged strongly at 5:30 p.m. GMT+7 because Central Bank of Russia (CBR) cut interest rate.
Oil remains in downtrend, traded at $59.11 at 6:12 p.m. GMT+7.
Today, ECB President Mario Draghi’s speech will have impact on EUR/USD, consequently affects oil price indirectly. Also tonight’s Empire State Manufacturing Index, Capacity Utilization Rate, Industrial Production and NAHB Housing Market Index will have certain influence.
Oil may continue to go down because:
- Last week Saudi Arabia declared to boost outputs to a new record to meet increasing demand globally and domestically, even as sliding-to-the-bottom price. “We have plenty of crude,” explained Ahmed Al-Subaey, Saudi Aramco’s executive director for marketing while in India to discuss with Indian oil officials supplying additional oil. “You are not going to see any cuts from Saudi Arabia,” he said. Saudi Arabia produced 10.3 mbpd in May, its highest rate on record.
- Investors are waiting for rate hike hint from June 16-17th meeting. Good numbers about employment and consumer spending in the early June might not be strong enough to urge Fed to move. The numbers of options is narrowed down to September or December. Dollar will move tracking to Fed’s recent action.
- CBR cut rate for the 4th time from 12.5% to 11.5% as expected. This event will cause a tiny wave on currency and commodity markets.
Supporting factors for oil is just temporary:
- According to National Hurricane Center (NHC), tropical storm from Mexico Gulf will threaten U.S. oil production and support for sudden rise in oil price.
- Oil storage of BRSM-Nafta with 900m3 is still on fire since yesterday, other oil tanks are at risk of this flame.
Forecast: Oil will go down to around $58.19.