Increased Volatility in Oil as Saudi Arabia Announces Voluntary Output Cuts
05 June 2023
The new week kicks off with increased volatility and momentum in the oil market, which was rattled over the weekend by news from Saudi Arabia. While OPEC+ made no changes to its planned oil production cuts for the year, Saudi Arabia announced voluntary output cuts scheduled to begin in July, aiming to reduce production by around 1 million barrels per day. Oil opened on Monday with a significant bullish gap, but traders started to sell shortly after the gap was created. Nonetheless, there is another fundamental factor that is expected to push prices higher.
The rest of the markets are in line with their mid-term trends. First and foremost, the strength of the American Dollar is notable. EURUSD is currently forming a bearish candle, aligning with the one from Friday when the US posted an impressive NFP (Non-Farm Payrolls) number. USDJPY is also starting the week on a positive note, along with USDCHF. Additionally, the Swiss Franc will be influenced shortly by inflation data from Switzerland, with CPI expected to rise to 0.3%. The data will be published 30 minutes before the European markets open.
Indices had an impressive performance on Thursday and Friday, leading to expectations of a potential correction this week to counterbalance the surge. However, the overall trend remains bullish, with no signs of imminent weakness.
Today's calendar is quite busy for a Monday. In addition to Switzerland's inflation data, we will also receive various Services PMI (Purchasing Managers' Index) reports from leading economies worldwide. Of particular importance is the publication of the ISM Services PMI in the US, expected to rise to 52.6, which will be released after the start of the American session. It is worth noting that all PMI reports today are anticipated to significantly surpass the 50 threshold, indicating growth in the respective sectors.