Oil prices finished yesterday with moderate falls after the U.S. House approved raising debt ceiling to $16.4 trillion. This news has brought back some stability to the market. Today, the U.S. Personal Spending report will be published along with Australian trade balance and Australian retail sales.
On Monday, August 1st oil price (WTI) declined by 0.85% to $94.89/b; this is the second straight business day in which oil prices were traded down.
Brent also fell by 0.48% to $116.25/b; during July Brent inclined by 4.57%.
US debt ceiling – the debacle continues
The House of Representatives voted to raise the US debt ceiling. The financial markets reacted as the USD appreciated against major currencies (see below) and oil prices traded down. But this effect will likely to end very soon as the US economy is still not performing well and its debt will continue to rise.
USD / oil prices – August update
On Monday, Euro/USD exchange rate declined by 1.03%; the USD/CAD inclined by 0.20%; the AUD/USD to USD fell by 0.20%; this means that USD moderately appreciated against major currencies. The U.S. debt ceiling news might have affected traders to trade up USD, but this news is likely to have a short term effect on USD.
US ISM Manufacturing PMI
This report was published yesterday and showed a decline in the growth rate in July as ISM Manufacturing PMI reached to 50.9% a 4.4 per cent points decrease compared with the previous month’s index. This news usually has little effect on oil prices, but it might affect the US dollar and thus indirectly affecting oil prices.
Oil prices started August with moderate falls, after they had ended last week the same way. This recent downward trend might be stem from the increased output in OPEC mainly Saudi Arabia; OPEC monthly report will reveal this matter (to be published next week); in the short term, oil price are likely to remain near $97-$100 for WTI and $116-$118 for Brent, but they might start to slowly pick up again during the week.
For further reading: Weekly outlook for August 1-5
Lior Cohen, M.A. commodities analyst and blogger at Trading NRG.