The U.S. dollar is higher against most major pairs ahead of the Presidents Day long weekend. American economic fundamentals had a strong week, but failed to gain traction given the rise of political risk as Trump's Administration continues to send mixed messages to markets. The stock market and safe havens like gold and the Japanese yen finished higher against the dollar in a very political week.
Crude oil prices are hanging in a tight trading range as the market tries to balance record U.S. petroleum inventories versus an outlook for a global tightening of supply as OPEC lays the groundwork for an extension of production cuts.
Oil prices rose on Thursday after OPEC sources said the group could extend its oil supply-reduction pact with non-members and might even apply deeper cuts if global crude inventories failed to drop to a targeted level.
The crude oil market is wondering why the Strategic Petroleum Reserve numbers remained unchanged even as the Department of Energy announced that it had already sold over 6.0 million barrels of oil to a private concern, and they announced another sale of 10 million more barrels of oil by the end of this month. We know there is mandatory reporting of inventory shifts by the oil companies but is the SPR on the same reporting schedule.
It is a new day for crude oil as it tries to adjust for another big increase in overall crude oil inventories, a more hawkish Fed Chair Janet Yellen and the impact of President Donald Trump’s executive order to roll back commodity regulations that have helped foreign oil companies prosper at the expense of U.S. oil companies.
The U.S.-based indices closed higher this afternoon. Asian stocks closed higher in the overnight session as equities in Europe closed mostly higher this morning, with the exception of the IBEX. Crude oil is maintaining its range-bound trading between the $50-$55 per barrel. WTI settled at $52.93. The most recent OPEC publication compliance toward the production cuts among member nations.