Oil edges up after steep fall; OPEC cuts, stocks draw support*
@ALLIESFIN
Oil prices edged higher on Wednesday, steadying after a more than 4% fall in the previous session, as extended output cuts by OPEC and its allies helped underpin prices despite growing concerns about weak demand.
An expected large draw in crude oil inventory in the United States also buoyed sentiment after a bigger-than-expected fall in inventories in a private survey.
Brent crude futures for September delivery were trading up 48 cents, or 0.8%, at $62.88 a barrel by 0053 GMT.
U.S. crude futures for August were up 37 cents, or 0.7%, at $56.62 a barrel. Both benchmarks fell sharply on Tuesday as worries about a slowing global economy overshadowed OPEC supply cuts.
The Organization of the Petroleum Exporting Countries and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to extend oil supply cuts until March 2020 as members overcame differences to try to prop up prices.
“The OPEC+ meeting showed the members sticking together in tough times, characterized by weakening global demand outlook, aiming for a more balanced oil market, despite clear market share implications,” said Amarpreet Singh, analyst at Barclays Commodities Research in a note.
“This is supportive of oil prices, in our view, even as the market remains squarely focused on weak macro signals.”
Ahead of government data due later on Wednesday, industry group the American Petroleum Institute (API) said that U.S. crude inventories fell by 5 million barrels last week, more than the expected decrease of 3 million barrels.
Still, signs of a global economic slowdown hitting oil demand growth worried investors after global manufacturing indicators disappointed and the U.S. opened another trade front after threatening the EU with more tariffs to offset government aid to the aviation industry.
Barclays expects demand to grow at its slowest pace since 2011, gaining less than 1 million barrels per day year-on-year this year.
Morgan Stanley, meanwhile, lowered its long-term Brent price forecast on Tuesday to $60 per barrel from $65 per barrel, and said the oil market is broadly balanced in 2019.
Dollar hobbled by lower U.S. yields, pound sags on dovish BoE*
The dollar struggled on Wednesday, having been nudged off two-week highs as fading optimism over any near-term Sino-U.S. trade deal revived safe-haven demand and drove U.S. yields down.
U.S. bond yields also tracked a decline in their British counterparts to 2-1/2-year lows on dovish-sounding comments from Bank of England Governor Mark Carney, which in turn weighed on the pound.
The dollar index (.DXY) against a basket of six major currencies stood at 96.742 after pulling back from 96.875 scaled on Tuesday, its highest since June 20.
The pound was steady at $1.2597 (GBP=D4)after shedding 0.35% the previous day, when it touched a two-week trough of $1.2584.
BoE’s Carney said on Tuesday that a global trade war and a no-deal Brexit were growing risks to Britain’s economy which might need more help to cope with a downturn, prompting investors to increase their bets on central bank easing.
The dollar traded at 107.83 yen (JPY=), having been nudged off a 12-day high of 108.535 scaled at the start of the week.
“The dollar fell below 108.00 yen again in light of BoE Governor Carney’s dovish comments, which helped depress global bond yields,” said Shinichiro Kadota, senior strategist at Barclays in Tokyo.
“Yields declined as the BoE, up until now, was seen as the only central bank which was not as dovish as others.”
The euro was little changed at $1.1291 (EUR=) following a volatile session on Tuesday, when it swung between a low of $1.1275 and a high of $1.1322.
The common currency had received a lift after a media report that European Central Bank policymakers are in no rush to cut interest rates at a July policy meeting. But it later slipped after IMF managing director Christine Lagarde, perceived as a policy dove, was nominated as the next ECB president.
By: via @AlliesFin Serve T.ME/ALLiESFiN
