Oil prices fell sharply yesterday after an unexpected drop in US oil inventories, easing concern about oversupply at the moment. According to the US Petroleum Institute, inventories fell by 1.5 million barrels last week.
US crude hit its lowest level since October 26, 2017 at 52.76 dollars a barrel, while Brent crude hit its lowest level since Dec. 7 at 61.70 dollars a barrel. So far, Brent crude has fallen more than 25 percent since it hit its highest level in 4 years at 86.74 dollars in October.
Markets are waiting for the OPEC meeting and its allies next month amid fears of oversupply and weak demand. Oil producers are expected to cut output after a few months of increased production. Production is estimated to be cut between 1 and 1.4 million bpd.
On the other hand, US President Donald Trump praised the role of Saudi Arabia in helping to reduce oil prices.
The euro witnessed recovery after hopes of a consensus on the Italian budget rose after the European Union rejected it for non-compliance with Euro zone rules, but the single currency will remain under pressure until a solution is reached after Italy's deputy prime minister said the budget deficit is not negotiable, The EUR is still trading near the 1.14 levels which could push it back higher again.
The British Pound has been trading in a very tight range, with the European Union summit due next Sunday. The British Prime Minister Theresa May has headed for Brussels today to try to resolve some of the sticking points in the Brexit deal. The Sterling is currently trading near the 1.28 levels and we may see it move towards the 1.2875 levels if it can break the current range between 1.2770 and 1.2815.
The USD still has reasons to resume rising, staying above the uptrend line on the daily chart, and it may lose these gains with any trading below 96 level.
