{"id":93783,"date":"2016-08-02T07:11:00","date_gmt":"2016-08-02T11:11:00","guid":{"rendered":"http:\/\/countingpips.com\/?p=93783"},"modified":"2016-08-02T07:11:00","modified_gmt":"2016-08-02T11:11:00","slug":"oil-prices-stabilize-after-entering-bear-market-territory-rba-cut-rates","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/08\/oil-prices-stabilize-after-entering-bear-market-territory-rba-cut-rates\/","title":{"rendered":"Oil prices stabilize after entering bear market territory, RBA cut rates"},"content":{"rendered":"
August 2, 2016<\/div>
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Article by ForexTime<\/a><\/p>\n

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Oil prices recovered slightly early Tuesday, after both major benchmarks WTI and Brent entered a bear territory on Monday, falling by more than 20% from their June peaks.<\/p>\n

The same factors which dragged prices to a 13-year low in Jan 2016 are back in play, it\u2019s all about the oversupplied market. \u00a0The rebalancing of supply and demand which was expected to happen in the second half of the year seems to have pushed out towards 2017 as disrupted supplies resumed, OPEC\u2019s output expected to increase to record highs, and rig counts continued to rise in the U.S.<\/p>\n

The discount provided by Saudi Aramco for its Arab Light crude oil for Asian customers by $1.30 a barrel reflects the ongoing aggressive competition for market share with other big producers within the cartel such as Iraq and Iran, and if similar actions are taken by rivals we expect more downward pressure on prices in the short run.<\/p>\n

Pessimism amongst speculators was also reflected in latest CFTC data, which showed that bearish positions for WTI rose to record highs and bullish bets dropped to their lowest levels in 5 months. However, I continue to see long-term opportunities as prices drift below $40 a barrel with a potential to rise back to June\u2019s high around $50 in Q4 2016 as we get closer to rebalancing in supply and demand.<\/p>\n

In the commodity currencies space, AUDUSD fell below 0.75 as Reserve Bank of Australia cut its benchmark lending rate to a record low of 1.5%. RBA was the first major central bank to act post U.K.\u2019s referendum vote, and now all eyes will be on Bank of England on Thursday with market expectations too high for the central bank to follow suit.
\nAccording to RBA\u2019s statement, \u201ceconomic growth continued at a moderate pace\u201d, suggesting that inflation was the major factor leading to the decision, and if prices remain stubbornly low in Q3, I expect another rate cut in 2016 which will add further pressure on the Aussie.<\/p>\n

Markets are awaiting Prime Minister Shinzo Abe’s cabinet to approve the 28 trillion-yen stimulus package today. However, direct fiscal spending will likely be a quarter of the total package which might disappoint markets and lead to further gains in Yen unless more aggressive action is taken.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Disclaimer: <\/strong>The content in this article comprises personal opinions and should not be construed as containing personal and\/or other investment advice and\/or an offer of and\/or solicitation for any transactions in financial instruments and\/or a guarantee and\/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.<\/em><\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Article by ForexTime Oil prices recovered slightly early Tuesday, after both major benchmarks WTI and Brent entered a bear territory on Monday, falling by more than 20% from their June peaks. The same factors which dragged prices to a 13-year low in Jan 2016 are back in play, it\u2019s all about the oversupplied market. \u00a0The […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-93783","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=93783"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93783\/revisions"}],"predecessor-version":[{"id":93796,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93783\/revisions\/93796"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=93783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=93783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=93783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}