|Day's range||38.28 - 38.64|
Oil prices dropped on Thursday, reversing gains in the previous session, on concern over whether major crude producers will be able to agree to extend record output cuts, heightened by worries over a huge build in U.S. distillate inventories. Brent crude futures fell 1.18%, or 47 cents, to $39.32 a barrel as of 0652 GMT, while U.S. West Texas Intermediate (WTI) crude futures slid 1.80%, or 67 cents, to $36.62 a barrel. Saudi Arabia and Russia, two of the world's biggest oil producers, have agreed to support extending into July the 9.7 million barrels per day (bpd) in supply cuts backed in April by the OPEC+ group, comprised of the Organization of the Petroleum Exporting Countries and other major producers.
The short-term direction of July WTI crude oil on Thursday is likely to be determined by trader reaction to the main 50% level at $36.07.
Private payrolls fall less than expected
A Minnesota pollution regulator said on Wednesday it will hold a public hearing this summer on Enbridge Inc's plan to replace its Line 3 oil pipeline, adding a potential three-month delay and pushing the bulk of construction to next year. The Minnesota Pollution Control Agency (MPCA) said the hearing will focus on how Enbridge <ENB.TO> intends to protect streams and wetlands that the pipeline crosses. Replacing Line 3, a 1960s-era branch of Enbridge's Mainline network, would allow the company to boost flow from a Canadian oil hub in Edmonton, Alberta, to Midwest refiners.
Crude oil markets continue to show a lot of volatility as Saudi Arabia is now talking about killing the idea of extended production cuts.
When OPEC, Russia and their allies agreed in April to slash oil production, little did they expect that their initiative to prop up collapsing prices would be helped by a swift drop in U.S. output. Now that crude has rallied on the back of those cuts from below $20 a barrel to $40 or more, the group known as OPEC+ faces a fresh challenge: stopping U.S. shale production delivering another surprise by recovering equally quickly. "The plan is to stick to prices of $40-$50 per barrel because as soon as they rise any further to say $70 per barrel it encourages too much oil production, including U.S. shale," said a Russian source familiar with OPEC+ talks on the issue.
The US dollar has gone back and forth against the yen during the trading session on Wednesday, as we continue to see a lot of noise just above at the ¥109 level.
Silver failed to settle above $18.00 and is pulling back towards the support level at $17.50.
The Australian dollar has been going straight up in the air for quite some time, and as a result it is likely that we need to see a little bit of a pullback.
Brent crude oils return to a 40 dollar handle has so far proven to be short-lived. During the past week the oil market has moved higher in the belief that the OPEC Plus group of producers at their virtual meeting Thursday would extent a deal to curb production.
Now that traders are looking for yield again, gold has become an unattractive asset.
Gold is 1.1% lower this morning following better-than-expected U.S. economic data releases. Financial markets remain in risk-on mode.
Oil prices have staged a remarkable comeback after falling into a deep abyss in April.
The introduction of heat into the forecast is enough to attract some speculative buyers.
OPEC leader Saudi Arabia and non-OPEC Russia have agreed a preliminary deal to extend existing record oil output cuts by one month while raising pressure on countries with poor compliance to deepen their cuts, OPEC+ sources told Reuters. OPEC+ agreed to cut output by a record 9.7 million barrels per day, or about 10% of global output, in May and June to lift prices battered by plunging demand linked to lockdown measures aimed at stopping the spread of the coronavirus. Rather than easing output cuts in July, OPEC and its allies, a group known as OPEC+, were discussing keeping those cuts beyond June.
Encouraged by signs of recovery in the market, OPEC+ is considering extending the cut beyond June.
China's oil demand has recovered to more than 90% of the levels seen before the coronavirus pandemic struck early this year, a surprisingly robust rebound that could be mirrored elsewhere in the third quarter as more countries emerge from lockdowns. While China - the world's second-largest oil consumer - is the outlier for now, easing travel restrictions and stimulus packages aimed at resuscitating economies could accelerate global oil demand in the second half of 2020, industry executives said. "The brisk resumption of Chinese oil demand, 90% of pre-COVID levels by the end of April and moving higher, is a welcome signpost for the global economy," said Jim Burkhard, vice president and head of oil markets at IHS Markit.
U.S. crude prices fell 1.6% to $36.24 a barrel, while Brent Futures rose as high as $40.52 a barrel before falling back to trade at $39.02.
Oil ended slightly higher on Wednesday but remained below the session's early highs above $40 a barrel, the highest since March, retreating as doubts emerged about the timing and scale of a potential extension to the pact between OPEC and its allies to cut crude supplies. Oil prices were supported by a drawdown in U.S. crude inventories in the latest week, but came under pressure as U.S. refined product inventories surged on tepid demand. "As product demand remains subdued, gasoline inventories showed a solid build, while distillates showed a mammoth one - despite refinery runs being over 3.6 million barrels per day below year-ago levels," said Matt Smith, director of commodity research at ClipperData.
Oil's uptick on output cuts and an economy gaining momentum could be a catalyst for stocks from the oil and energy industry in the near future.
Investing.com - Our senior markets analyst Jesse Cohen gives us his top five things to know in financial markets on Wednesday, June 3, including:
It’s a busy day ahead. Service sector PMIs put the EUR and Greenback in focus, with the BoC and Brexit putting the GBP and Loonie in the spotlight.