Global macro overview for 03/08/2017:
The recent Crude Oil inventories data recorded another draw in stockpiles. According to Energy Information Administration (EIA) data an inventory draw of -1.5M barrels for the week ending July 28th following a draw of -7.2M barrels the previous week. The market participants expectations were as well set for a draw of -3.4M barrels. although another unexpected build in the API data triggered a fresh round of uncertainty ahead of the EIA release.
The OPEC oil production increased in July to 2017 high and the main contributor was from Libya, one of the countries exempt from a production-cutting deal. The second country with the biggest output and export was Iran. The other country participating in a draw in stockpiles was Saudi Arabia, which was cutting exports to the US with the end goal appearing to be to cut inventories and grab markets attention.
After the joint OPEC and non-OPEC Ministerial Monitoring Committee (JMMC) meeting last month in Saint Petersburg, some interesting conclusions were made. The global crude oil demand will increase in the second half of 2017 by 2 million barrels per day, which will help drain commercial crude oil reserves. Moreover, JTC concluded, that as of June 2017, members of the OPEC/non-OPEC have complied with 98% of the total oil production cut requirement. Despite the agreement, the weekly data from EIA and API are still reporting draws, which is not particularly welcome if the OPEC and non-OPEC members deal is in operation on a daily basis. This situation might increase the price of Crude Oil ( and Brent Oil as well) to the levels above $50 with ease.
Let's now take a look at the USD/CAD technical picture at the daily timeframe. This pair is highly correlated with the price of Crude oil ( inverted correlation). The pair has bounced from the important multi-month technical support at the level of 1.2456, but so far did not manage to test the technical resistance at the level of 1.2653. If the bull camp will not manage to break out above this level, the bias remains to the downside and another leg down is expected.
