China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Fundamental analysis: 3 events to trade
2019-11-11 • Updated
The upcoming days are going to contain lots of important economic events. Let’s go through them together in order to prepare for profitable trading.
RBNZ Official Cash Rate & Rate Statement
When: Wednesday, June 26
Instruments to trade: NZD/USD, NZD/JPY, AUD/NZD
According to the consensus forecast, the Reserve Bank of New Zealand will leave its benchmark interest rate unchanged at 1.5% after the central bank cut it in May.
All in all, we can’t expect much optimism from the RBNZ. After all, New Zealand’s economic growth staggered at 5-year low in Q1. Still, according to swaps, the market is already pricing in 42 basis points of additional rate cuts this year. As a result, even if the regulator is dovish, the potential for further weakness in the NZD is limited. On the contrary, if the RBNZ sounds less dovish, the currency will be able to strengthen in the short term.
When: Friday, June 28 - Saturday, June 29
Instruments to trade: USD/CNH, USD/JPY, USD/TRY
The United States and China agreed to meet at the G20 summit. That gave traders hope that the two nations will be able to make some progress in their trade talks and avert the mutual tariffs that are creating risks for the global economy.
In addition, the meeting between Donald Trump and Turkish President Tayyip Erdogan will have a big impact on the Turkish lira. The parties will discuss Turkey’s purchase of Russian S-400 defense systems and the threat of US sanctions.
When: Monday, July 1 - Tuesday, July 2
Instruments to trade: WTI, Brent
The Organization of Petroleum Exporting Countries (OPEC) was to meet on June 25-26. However, the separate OPEC ministerial meeting and the meeting of OPEC and its allies, known as OPEC+, were postponed to July 1-2. The reason for the delay is that Saudi Arabia, Iran, and non-OPEC Russia want to see the results of the G20 meeting.
The world’s leading crude oil producers will have to decide on whether to continue the deal to reduce production by 1.2 million barrels a day (the deal runs out on June 30). The most likely scenario is that that production cuts will be extended. This will have a minor impact on the oil price. However, other outcomes are also possible. If the cuts aren’t extended, the oil will tumble - this will, however, be possible only if the US and China reach a trade deal before the OPEC meeting. On the contrary, bigger cuts will make oil soar.
Notice that oil climbed in the past week due to the growing tensions in the Middle East. Iran shot down an American drone and almost triggered US airstrikes. The US also blames Iran for attacks on two tankers near the Strait of Hormuz. The escalation of the situation is a threat to oil supply and thus positive for the price.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.