The cartel of oil producers mitigates production cuts, expecting greater demand for crude oil. The EUR/USD exchange rate may be affected by the European Central Bank's decision on interest rates. It will be published today at 13:45 with a press conference at 14:30.
According to the Financial Times, the European Central Bank is likely to hold off from further action, observing the impact of previous monetary decisions on the economy. The ECB seems to have a relatively long time to assess the macroeconomic data that can be improved by the huge programs implemented by the central bank, ECB President Christine Lagarde said in an interview with the FT.
Lagarde added that the situation has calmed down after the implementation of these programs. In her opinion, the agreement on the EU recovery fund this year is uncertain, and the economy still has a long way to go before full recovery. It should also be pointed out that it is too early for the EU to withdraw from the emergency bond purchase program, FT's publication shows.
It seems that today's ECB decision may affect the EUR/USD, as may the EU's weekend summit.
The prince announces an increase in demand for fuels
On the oil market, OPEC+ took its first major decision to reduce the output cut. On Wednesday, the Organization of Petroleum Exporting Countries and its allies decided to reduce the cut from 9.7 million barrels per day to 7.7 million barrels per day from the beginning of August. The current reduction of production by almost 10 million b/d lasted from May 1 to July 31 and was aimed at reducing oil supply given the huge drop in demand caused by the closure of economies by the coronavirus epidemic.
Prince Abdulaziz bin Salman, OPEC Energy Minister, and Saudi Arabia's leader said after the 20th meeting of the Joint Ministerial Monitoring Committee (JMMC) that 23 countries within OPEC+ are opening and unlocking their economies. Prince Abdulaziz added that OPEC+ expects the consumption of aviation fuel, petrol, and diesel to increase in the coming months. He also added that member states that have not fully achieved production reduction levels in May and June will reduce their oil production in July, August, and September as compensation. Therefore, the effective total reduction in OPEC+ oil production levels could be around 8.1 million barrels per day in August. The next JMMC meeting will take place on 18 August.
After a very sharp increase since the second half of April, WTI oil price seems to be consolidating in the area of USD 41.50, where at the beginning of the March the bearish gap appeared.
Daniel Kostecki, Chief Analyst Conotoxia Ltd.
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