Crude Oil Price Drops as Questions on Demand and Supply Linger
The price of crude oil declined today as investors continued to worry about demand. The WTI declined by 14% while Brent declined by just 4%. The market ignored some good news reported today and on Friday. Before the weekend, Baker Hughes announced that US oil producers had exited more than 60 wells in the previous week. This was the sixth straight weeks of declines. Today, Saudi Arabia said that it would start cutting production before the agreed May 1 date. The market appears to be concerned about demand now that most people are working from and staying at home. Also, they are worried about supply since most storage facilities are getting full. A report by SCMP said that about 60 oil tankers were anchored in Singapore with oil no one wanted. A similar scenario was observed in California.
The Japanese yen rose against the dollar after the Bank of Japan released its interest rates decision. As was widely expected, the bank left interest rates unchanged at -0.1%. The biggest news was that the bank was committing to buying an unlimited amount of government bonds and increasing its purchases of corporate debt. This means that the bank will continue to expand its balance sheet, which stands at more than $5.3 trillion. This balance sheet is greater than Japan’s GDP of more than $4.97 trillion.
Global stocks rose today as investors continued to focus on corporate earnings. From Europe, the DAX index, CAC, and Stoxx 40 rose by more than 1% while Dow and S&P500 futures point to a 1% gain. The biggest companies that released their earnings today were Bayer, General Motors, Adidas, and Deutsche Bank. Bayer’s revenue rose by 20% while Deutsche Bank reported better-than-expected results. In the United States, General Motors suspended its dividends and share purchases as its business dealt with the current pandemic. We will receive earnings from Baidu, Prudential, and NXP later today.
The EUR/USD pair rose to an intraday high of 1.0860, which is along the 50% Fibonacci Retracement level on the hourly chart. The price is also slightly above the short and medium-term moving averages while the RSI is slightly below the overbought level of 70. The pair may continue moving upwards as traders focus on the upcoming interest rates decisions by the Fed and ECB.
The XBR/USD pair inched downwards slightly as investors continued to worry about demand. The pair is trading at 23.26, which is along the 23.6% Fibonacci Retracement level. The trend has been relatively bearish since Thursday when it tested the 26.57 high. The pair may continue moving downwards as investors continue to worry about demand. If it does, the next level to watch will be the psychological level of 22.0.
The USD/JPY pair declined to an intraday low of 107.02 after the BOJ delivered its interest rates decision. On the 30-minute chart, the price is below the 14-day and 28-day exponential moving averages while the RSI has remained slightly above the overbought level. The price is also slightly below the dots of the Parabolic SAR. The pair may continue moving downwards ahead of the Fed decision on Wednesday.
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