July 4, 2023: OPEC+ Extends Oil Production Cuts

Oil stabilizes as the market reacts to production cuts due to weak economic data.

Oil prices remained stable on Tuesday as supply difficulties impacted markets due to planned reductions in August by Saudi Arabia and Russia, the largest crude oil suppliers, in the face of economic data suggesting weak oil demand.

Brent crude futures rose 65 cents, or 0.87%, to $75.30 per barrel.

U.S. crude reached $70.41 per barrel, up 62 cents or 0.89%.

The U.S. markets are closed today, Tuesday, due to a national holiday for Independence Day. Benchmark crude recorded a 1% decline in the previous session.

Saudi Arabia announced yesterday, Monday, that it will extend its voluntary production cut of 1 million barrels per day until August.

Deputy Prime Minister of Russia, Alexander Novak, said Russia would also reduce its oil exports by 500,000 barrels per day in August.

These cuts amount to 1.5% of global supplies and raise the total production cut commitments from OPEC+ producers to 5.16 million barrels per day, as Riyadh and Moscow seek to support prices.

The yen stabilizes, while the Australian dollar declines.

The yen remained stable on Tuesday, July 4th, but remained vulnerable to further decline as markets awaited indications of intervention by Japanese authorities. The Australian dollar fell after the central bank decided to keep interest rates unchanged.

The Reserve Bank of Australia kept interest rates at 4.10%, stating that it needs more time to assess the impact of previous increases. However, it cautioned that further monetary tightening may be required to curb inflation.

  • AUD/USD: The Australian dollar declined by 0.3% to $0.6654 following the decision of the Reserve Bank of Australia, erasing gains made at the start of the trading session.

Currency market investors remained cautious about potential intervention by Japanese authorities to halt the yen’s losses.

  • USD/JPY: The yen recorded 144.64 against the dollar in the latest Asian trading but remained close to its eight-month low last week at 145.07, prompting Finance Minister Taro Aso to warn against excessive yen selling.
  • DXY: The dollar index, which measures the performance of the U.S. currency against a basket of major currencies, rose by 0.097% to 103.05 after overnight data showed a larger-than-expected decline in the U.S. manufacturing sector in June, reaching levels not seen since the aftermath of the first wave of the COVID-19 pandemic.
  • EUR/USD: The euro declined by 0.13% to $1.0897, while the British pound fell by 0.05% during the day to reach $1.2685 in the latest trading.

Tesla Stock Gains $57 Billion in One Day, Wells Fargo Shares Reach 4-Month High.

U.S. indices closed with slight gains in Monday’s session as the gains of Tesla and banking stocks offset healthcare stock losses.

The stock market closed on Monday at 1:00 PM Eastern Time, ahead of the Independence Day holiday on Tuesday, July 4th.

The Dow Jones index rose by a small percentage, about 0.03%, equivalent to approximately 11 points, marking its highest close in 7 months.

The S&P 500 index also increased by approximately 0.12%, reaching its highest close in 14 months.

The Nasdaq Composite Index rose by about 0.2%, closing above 13,800 points for the first time in 15 months.

  • Tesla Stock: Tesla’s stock jumped by approximately 6.9%, closing around $280, marking its highest level in 9 months. The company achieved its highest daily gains in over three months, adding over $57 billion to its market value daily.

These gains came after the company announced record deliveries during the second quarter of 2023. Total deliveries reached 466,140 vehicles, while production reached 479,700 vehicles.

  • Wells Fargo Stock: Shares of major US banks rose after they increased their dividend payouts for the third quarter on Friday after the market close.

The banks passed the stress tests conducted by the Federal Reserve last week, paving the way for lenders to return capital to shareholders through dividends and buybacks. Wells Fargo’s stock jumped by 1.7% in Monday’s session, reaching its highest level in 4 months.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

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