Global macro overview for 02/06/2017:
The latest Energy Information Administration (EIA) data reported bigger than expected draw in Crude Oil inventories. Market participants expected an inventory draw of -2,700k barrels after a slump of -4,432k barrels last week, but the draw was even bigger than expected and it was at the level of -6,428k barrels and it was the largest draw this year. The Crude Oil inventories declined to 50,990k barrels and are at the lowest level for close to 4 months. This data was a relief for the producers as it means there will be a sustained reduction over the next few weeks. After the production cuts were extended again by OPEC and non-OPEC countries in late May this year for another nine months, the oil ministers including Saudi Arabia's Khalid al-Falih confirmed deeper curbs had been debated. The current proposal is to cut OPEC's supply by about 300,000 barrels per day (bpd). In the result, it would cut the overall monthly production by 32 million bpd and increase the total of OPEC cut from 1.2 million bpd to 1.5 million bpd.
In conclusion, OPEC still expects the production cuts to help to get rid of the supply glut that should ease in the next few months as they perceive the economic fundamental to be close to the balance. Nevertheless, if this situation on the oil market extends further, OPEC will have to introduce even more drastic measures at its next meeting in November. The price of the Crude Oil is still being affected by various news from the financial media stream but keeps oscillating around the $50 level.
Let's now take a look at the Crude Oil technical picture on the H4 time frame. The reaction for news wasn't so strong as expected, as the bulls couldn't break above the $50.00 level. Currently, the price has violated the technical support at the level of $48.01 and is heading towards the next support at the level of $46.90.
