A surprise increase in U.S. oil supply as reported by the American Petroleum Institute as well as a report on increased shale oil production from the International Energy Agency has the oil market acting loopy. The IEA predicted that oil supply would outstrip demand next year, with output increases from U.S. shale producers.
According to the U.S. Energy Information Administration (EIA), U.S. oil output is likely to rise for the seventh straight month to a record 5.48 million barrels per day in July. This would take another bite out of the OPEC’s market share, with the cartel having set a self-imposed production cap.
Crude oil prices are playing the geopolitical gyration game. Events in Brazil, Iran, Saudi Arabia, Venezuela and the United States have oil prices and traders trying to price in risk in a rapidly changing political world. Calls for impeachments, changing political relationships, elections, OPEC meetings, the list goes on and on.
Investors have arrived in full force to exploit the opportunity to sell the euro at its highest level since November 2016, with the EUR/USD now appearing at risk to dropping back below 1.09 after briefly climbing above 1.10 when the markets opened for the week following confirmation of Macron becoming the new President of France.