Crude oil prices hit a two-month high on June 6, with the WTI futures contract trading at 120.99 US$ per barrel and the Brent contract at 121.95 US$ per barrel in the Asian session early in the day. Both have dropped by over 1 dollar since then.
OPEC+ members decided to raise daily output quotas last week, but it appears that the group will not be able to meet its goals. Crude has also been supported by the drop in US stocks reported by the Energy Information Administration (EIA) on June 3rd.
Earlier on June 6th, Saudi Aramco increased the price for Asian clients while maintaining the same pricing for US clients. The increase of US$ 2.10 barrel was higher than expected. With the US Dollar weakening, gold is up a slight bit, trading at $1856/oz. The lifting of Covid-19-related limitations in China gave a jolt to APAC equities, which mainly brushed off the poor performance on June 3rd on Wall Street. The Hang Seng and CSI 300 indices in Hong Kong witnessed the most gains in the area.
The Nikkei 225 index in Japan was likewise up, but the ASX 200 in Australia was marginally lower before the RBA rate announcement tomorrow. The market is split on whether to raise rates by 25 or 40 basis points (bps).
The RBA has traditionally adjusted in 25-basis-point increments, but meeting minutes show that they discussed a 40-basis-point increase during last month. To begin the week, the Australian Dollar is slightly weaker, while the Japanese Yen is stronger.
Notwithstanding a largely optimistic attitude toward volatility in other markets, currencies had a calm Monday, and it appears that the same trend will follow for the rest of the week. Following the RBA’s announcement on June 7th, the ECB will announce its own rate move later on June 9th.
On June 6th, WTI broke through barrier levels to hit a two-month high. It is hovering around the top side of the Bollinger Band based on a 21-day simple moving average (SMA), but has still to break through. This might indicate that the market is willing to accept the new level for the time being. The price is still over all period SMAs, implying that a more bullish sentiment is on the way.