Oil Edges Higher as Producers Conclude Meeting

The quiet summer period is very much upon us and markets are currently trading relatively flat as a result on Tuesday. Oil continues to be a little lively though as we await inventory numbers later in the session and the conclusion of a two day meeting in Abu Dhabi.

Earnings season has been a key focal point for traders in recent weeks, with the stellar performances in the US providing the catalyst for new record highs in equity markets. But with many of the largest companies having now reported, attention is slowly shifting back towards central banks and what we can expect from them in the coming months.

South African Rand Higher on Expectations Zuma is Removed

USD Remains Soft Despite Jobs Report Boost

The jobs report on Friday put the spotlight back on the Federal Reserve but once again, the report ticked every box except on wages, a crucial component of future inflationary pressures. We heard from two policy makers at the Fed over the last 24 hours and, as is to be expected from two of the central banks most dovish policy makers, there was no sign of either putting forward the case for higher interest rates.

The Fed may find raising interest rates again this year more challenging than they did the previous two occasions and that’s what markets are clearly anticipating. The US dollar is trading softer again on Tuesday after having caught a nice bid following Friday’s jobs data, with traders focusing on jobs gains and unemployment over wages. Still, the dollar index continues to language around its lowest levels since the start of 2015 and a move below the 92-93 area could be very bearish for the greenback.

Source – Thomson Reuters Eikon

Brent and WTI Higher Ahead of API Data and Abu Dhabi Outcome

While JOLTS job openings is the only notable US economic release today, we will get some oil inventory data from API later in the session which should be of interest. Oil is trading a little higher in today’s session, with Brent crude pushing the highs of the last week – around $53 – a break of which bring May’s highs around $55 into focus.

We should also hear from OPEC and non-OPEC producers later in the day after their meeting in Abu Dhabi, in which compliance with the cuts was discussed having slipped recently. Any signs that the agreement is facing difficulties could be quite bearish from Brent and WTI crude.

Economic Calendar

For a look at all of today’s economic events, check out our economic calendar.

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.