01.07.2019: Oil market sentiment improves; ruble recoups losses (Brent, RUB, USD)
On Friday oil prices declined significantly. Market participants focused on the public comments from the G20 summit in Osaka.
Probably, the negative price dynamics was contributed to a selloff wave triggered by speculators who expected positive news on Friday. However, the positive news came following the meeting between Donald Trump and Xi Jinping.
The US President noted that the meeting was perfect just as it should have been. The sides agreed to resume the trade negotiations and postpone new tariffs. Moreover, Mr.
Trump pledged to loosen a ban that had been recently imposed on Huawei. At the same time, the upbeat comments about the OPEC+ meeting that starts today provided strong support to oil prices. Russian President Vladimir Putin said Russia and Saudi Arabia agreed to extend the output cuts deal for the coming 6-9 months.
Today’s trend in the oil market is definitely bullish. Brent futures advanced by 2% and were consolidating near the level of 66.5 dollars per barrel.
If the current sentiment persists during the weak, then oil prices may reach the level of 67-68 dollars per barrel. Further on, Baker Hughes released the oil rig count report on Friday. The report showed that the number of active drilling facilities in the United States increased to 793 units.
However, in annual terms this number declined by 65 units. The oil rig count report is considered to be a leading indicator of the output levels. So, an annual decline in the drilling activity signals potentially lower production volumes in the United States in the second half of the year. On Friday the US dollar declined slightly as investors were worried that the G20 summit would not bring any feasible results. The currencies of developing countries were trading mixed.
However, the actual results of the summit exceeded expectations. Besides, concerns about the global economic growth eased as Trump cancelled introduction of additional tariffs on Chinese goods. On Friday the Russian ruble depreciated and looked weaken than other EM currencies.