Crude oil price rises after a steeper fall in US inventories
The price of crude oil rose in the Asian session after the EIA released inventories data yesterday. Data showed that there was a drawdown of more than 12 million barrels in the past one week. This was a bigger drawdown than the 2.5 million that investors were expecting previously. This data came shortly after the American Petroleum Institute (API) showed that there was a drawdown of more than 2 million barrels. This happened ahead of the OPEC meeting, which will happen on Monday and Tuesday next week in Vienna, Austria. It also came after it emerged that China was defying US sanctions and was actively buying crude oil from Iran.
The Japanese yen weakened against the USD after the country released retail sales data. Data from the Ministry of Economy, Trade and Industry showed that sales rose by an annualized rate of 1.2% in May. This was in line with what investors were expecting and was the fastest growth this year. On a MoM basis, sales rose by a seasonally-adjusted rate of 0.3%. This data came a day after Shinzo Abe said that his government will raise consumption tax from 8% to 10% in autumn. It also came as the country prepared to host the G20 meeting.
Today, in Spain, investors will receive CPI data. The headline CPI is expected to have remained unchanged at 0.8% while the harmonized CPI is expected to have declined from 0.9% to 0.8%. In the European Union, investors will receive the sentiment survey data. The business and consumer survey for June is expected to decline from 105.1 to 104.6. The business climate index is expected to decline from 0.30 to 0.23 while the services sentiment is expected to increase from 12.2 to 12.4. In Germany, the headline and harmonized CPI are expected to remain unchanged at 1.4% and 1.3% respectively. In the US, the country’s final reading of Q1 GDP is expected to remain unchanged at 3.1%.
The EUR/USD pair declined ahead of US GDP data. It is now trading at 1.1353, which is lower than the 25-day and 50-day moving averages. The RSI has dropped from 60 to the current 39 while the price is trading slightly above the support of 1.1242. The price is also along the lower line of the Bollinger Bands. The pair will likely remain along this level ahead of the US GDP data.
The price of crude oil has been on an upward trajectory this month. Brent has moved from a monthly low of $59 to a high of $65.91. As shown on the hourly chart below, this trend started after the pair made a double bottom pattern. Today, the XBR/USD pair is trading at 65.25, which is slightly higher than the 25-day and 50-day moving averages. The RSI has remained unchanged slightly under the overbought level of 70. The pair will likely retest the important resistance level of 66 ahead of the OPEC meeting.
The USD/JPY pair rose to a high of 108.07, which was the highest level since Tuesday this week. This price is above the weekly low of 106.75. On the four-hour chart, the 14-day and 28-day moving averages have made a crossover, which implies that the pair could continue the upward trend for the coming days. The price is also along the 23.6% Fibonacci Retracement level. There is a possibility that the pair will continue moving higher, to test the 38.2% Fibonacci Retracement level of 108.93.