Oil continued to trade lower on Thursday as traders look ready to test new lows for crude prices with worries persisting over a global glut.
Since peaking in late February, crude has dropped approximately 20%, with only brief rallies, completely erasing the gains it made at the end of the year following the initial OPEC-led production cut. OPEC and other major producers agreed to cut output by 1.8 million barrels per day from January for six months which was recently extended for an additional nine months. Whilst this was a major shift in policy for OPEC the hope it gave to markets was short lived. With increased production from the US, Nigeria, Libya and other producers the extra supply outstripped demand and forced prices lower. US Crude inventories fell 2.5 million barrels in the week to June 16, surpassing analyst expectations for a decrease of 2.1 million barrels. Even comments from Iran’s oil minister that OPEC members are considering further output cuts has made little impact to prices.
Brent crude was trading at $44.95 a barrel at 09:05 GMT, after spending much of the Asian trading day in positive territory. Brent had fallen 2.6% in the previous session to its lowest level since November of last year.
WTI was trading at $42.50 a barrel at 9:10 after spending much of the day trading higher this after touching its lowest intraday level since August 2016.
GBPUSD is trading around $1.2670 after making some gains on Wednesday after Bank of England’s chief economist, Andy Haldane, suggested that “he was likely to vote for an interest rate hike this year”. Haldane was largely supportive of keeping rates low, contrasting sharply with the tone set by the bank’s Governor Mark Carney just the day before.
NZD gained nearly 0.5% against USD following the expected RBNZ decision to keep interest rates unchanged at a record low 1.75%. RBNZ Governor Wheeler stated “Global economic growth has increased and become more broad-based. However, major challenges remain with on-going surplus capacity and extensive political uncertainty”. NZDUSD was trading at 0.7260 at 9:30 BST.
Markets will be looking at US Initial Jobless claims, that are released at 13:30 BST today and a scheduled speech from FOMC member Powell at 15:00 BST for further evidence of the US economy strengthening.
