18.07.2019: Oil prices decline further amid US statistics (Brent, RUB, USD)
There are no updates on the talks between Washington and Tehran yet. On Tuesday, oil prices declined after the US officials had noted progress in the negotiations and readiness of Iran to discuss the nuclear program. However, Iran deflated these statements. Still, oil prices haven’t managed to recover completely. Those traders who had opened sell deals while prices were falling were stopped out due to negative market reaction to the weekly EIA report.
The report showed that the commercial stockpiles of crude oil in the United States decreased by 3.12 million barrels while a fall of 2.69 million barrels was expected. The total volume of inventories came in at 455.9 million barrels. This level was last seen in April.
The export volume contracted by 0.51 million barrels per day and was at 3.05 million barrels. At the same time, the import volume declined by 0.47 million barrels to 6.8 million barrels per day.
A fall in production of crude oil last week was connected with the tropical storm threat in the Gulf of Mexico. The output in this region contracted by about 74%. The lower-than-expected decline in inventories surprised market participants which triggered a sell-off in oil futures.
The Brent crude benchmark has hit the local low, sliding below the level of 64 dollars per barrel. However, the downward trend is likely to be short-lived. As soon as the effect of the tropical storm threat and inventories data fades away, the price may recover to the levels above 65 dollars unless the news background deteriorates.
Today in early deals Brent futures advanced by 0.3% to 63.87 dollars per barrel.
At the same time, the Russian ruble has gained ground as the new tax period started in Russia. However, the currency interventions by the Bank of Russia and volatile conversion of ruble-denominated dividends may limit a rise in the national currency.
Half an hour after the market opening, the dollar-ruble pair for “tomorrow” settlements was trading at 62.82. Thus, the ruble added 0.2%.
What is more, expectations of the monetary policy easing by the Federal Reserve and the European Central Bank also provided support to the Russian currency. If the central banks take on a loose approach, it will be possible to fund high-risk operations in euros and dollars. The ECB monetary policy will be held on June 25 while the Federal Reserve will have its rate-setting session on July 31. The new tax period in Russia began on Monday. The deadline for payment of the mineral extraction tax is July 25 while the profit taxes should be paid by July 29.
We keep close tabs on the market developments. Stay tuned!
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