Crude Oil Not Expected to Get Help from OPEC
December crude oil futures are trading flat at the start of the week. Last week, the market sank to multi-month lows amid concerns over a weakening global economy and its impact of future demand. Value-seekers did jump in when the market reached $79.10, but after the initial thrust, there was no follow-through to the upside.
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The supply picture remains bearish because of overproduction by the U.S., Russia, and Saudi Arabia. The U.S. continues to overproduce because of improved drilling. Russia is selling oil to raise cash because of cash-flow problems caused by the economic sanctions imposed by Europe. Saudi Arabia seems comfortable with $80.00 oil and sees no need to cut-production. Two weeks ago, it decided to cut prices to Asia rather than production.
In addition to Saudi Arabia, indications are the Organization of the Petroleum Exporting Countries will not slash output to support prices. Last week, Kuwait joined Saudi Arabia, Iraq and Iran in lowering prices to Asia. OPEC meets on November 27 to consider whether to cut production in 2015.
December Comex Gold continued to hold its ground after posting a solid gain last week. This market is waiting for the dollar to make its next move. A weaker dollar should trigger more short-covering that is likely to drive the market into a major retracement zone at $1253.80 to $1270.40.
The lack of fresh economic news held the EUR/USD in check on Monday. The range was limited and volume was below average. Traders appear to be trying to absorb last week’s spike to the upside from 1.2624 to 1.2886.
The EUR/USD found support last week amid speculation the Federal Reserve would slow-down its pace for interest-rate increases amid slowing global economic growth. This encouraged traders to lighten up on the short-side, changing the main trend to up on the daily chart.
Trading could be subdued until October 23 when the Euro Zone will release the latest Flash Manufacturing and Flash Services PMI data.
The GBP/USD rose to its highest level in a week after reports showed U.K. home prices gained for a second month in October. U.K. home prices rose 2.6 percent in October from the previous month. U.K. Consumer Confidence rose three points versus a year ago. The highest since the survey began in 2011.