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Oil Prices Drop as Oversupply of Crude Continues

Crude Inventories Grow, Future in Peril

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The price of oil dropped Wednesday after the US Energy Information Administration reported that US crude inventories expanded by 1.1 million barrels for the third consecutive week.  This is extremely alarming data as analysts had forecast a contraction of 1 million barrels.  Crude rebounded after the release of the data and closed the day at $41.34, a -0.90% decline from the opening bell.

Saudi Arabia Produces Record Crude in July


As OPEC is deciding if a production freeze is a feasible option to increase international oil prices, Saudi Arabia recorded a record high output during the month of July. The ANZ bank reported that Saudi Arabia, the second biggest producer of oil in the world and the largest OPEC country reported an output of 10.67 million barrels a day in July. This is unsettling news for the smaller countries of OPEC that largely favor a production freeze. OPEC has a tentative meeting on the books next month in Algeria to discuss how the organization will bring up oil prices and possibility limit production.

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Bank of New Zealand Cuts Rates; Another Cycle Expected Soon


As expected, the Royal Bank of New Zealand cut its interest rate by 25 base points Thursday morning to a record low of 2.00%. Interestingly, the NZD strengthened against the greenback instantly after the rate cut - up 0.93% and peaking at 0.7351 right after the decision.  NZDUSD finished the day strong at 0.7265, up 1.10%. According to analysts, the currency rose because of speculation right before the decision that the RBNZ could cut the rate by 50 points. Because the cycle wasn’t deep and the Kiwi rose against a basket of currencies, the New Zealand interest rate could be cut another 25 by the end of the year.

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Aussie Continues to Rise After Positive Consumer Confidence Report


The Australian dollar continued to climb after a wake of bullish data released on consumer confidence in Australia. The Aussie closed the US session against the greenback at 0.7740, its highest level since April after a strong Westpac Consumer Sentiment report Wednesday.

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Initial Jobless Claims Will Be Released Today


Initial Jobless Claims data will be released today after a stretch of poor US data following the strong nonfarm payrolls released last Friday. Jobless claims for Thursday’s report is forecast at 265,000, a slight drop off of lasts week's results of 269,000 claims filed. A bearish Jobless Claims report for this week would complete a three week string of negative data and will create more doubt from experts that the US is not on track for normalization.

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