19.07.2019: Oil and RUB unaffected by Gulf tensions (Brent, RUB, USD)
On Thursday, negative sentient worsened in the oil market that pushed oil prices down. What events dented investors’ confidence and what impact did they make on commodity currencies, the Russian ruble in particular? Let’s find out from our video on InstaForex TV channel.
The main reason behind a sharp decline in oil prices is a downgraded forecast of global demand for crude oil. Earlier, the concerns about troubles in the global economy triggered sell-offs in the oil market. Indeed, under conditions of oil production cuts according to the OPEC pact, waning demand will deflate oil prices considerably. Apart from a revised forecast, no other news was released.
The International Energy Agency reduced its forecast of oil demand for 2019 to 1.1 million barrels per day from 1.5 million barrels projected at the start of the year. Thus, the forecast was slashed by 26%. Moreover, experts warned that forecasts could be downgraded later.
Yesterday’s drop of oil prices is viewed as revision of market conditions by some large market players. A day earlier, speculators closed long positions in oil options. The most of such orders were closed during the North American trade when oil prices slumped instantly below 61.5 US dollars a barrel. On Friday morning, crude oil rebounded with a 2% rise.
The oil market found support from political tensions between Washington and Tehran in the Persian Gulf. Yesterday, the US Navy shot down an Iranian drone in the Strait of Hormuz. However, Iran stated that it lacks details of the missing drone.
Analysts expect a further revival of oil prices because a losing steak in the previous days was caused by short-term factors.
Since early morning, WTI climbed over 56 US dollars a barrel.
Later today, Baker Hughes is due to report on drilling activity in the US last week. The oil rig count could reveal new contraction.
On Friday morning, the ruble is trading steadily as support from rising oil prices offsets an advance in the US dollar. The dollar/ruble pair is trading sideways in the range of 62.80 to 63.00.
Back to Forex. The US currency is struggling to develop a rally following sell-offs on Thursday. The greenback tumbled following dovish remarks from New York Fed President John Williams.
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