Oil closes in the green zone due to robust demand

Thursday, supported by strong global demand, prices of oil were able to gain some strength. However, the persisting rise in U.S. output still threatens the efforts led by the Organization of Petroleum Exporting Countries and Russia to cut output in order to balance the market. Brent crude futures, the international benchmark, settled at $64.95 per barrel, which was 0.1%, or 8 cents, higher than their last settlement. The United States West Texas Intermediate was traded at $61.05 per barrel, which was 0.15%, or 9 cents, higher than their previous close.

Oil prices were supported by robust global demand. OPEC mentioned on Wednesday that oil consumption was expected to increase by approximately 1.62 million barrels per day in the coming year. However, the continuous rise in United States crude supply still pressures the market. According to official data, U.S. crude production managed to cap another record last week by rising to 10.38 million barrels per day, which was over 23% higher compared to mid-2016. U.S. commercial crude inventories went also higher by approximately 5 million barrels to 430.93 million barrels.

U.S. dollar declines against the Japanese yen on concerns over an impending global trade war

Due to concerns over looming global trade tensions, the U.S. dollar fell against its Japanese counterpart. The greenback settled at 105.94 yen JPY=, which was 0.4% lower than the dollar’s previous settlement of 107.30 yen capped on Tuesday – the greenback’s highest point since February 28, 2018. The euro continued to rise against the dollar, trading at $1.2377 after climbing by 0.1%. The dollar index kept stable at 89.667 .DXY.

The weakening of the dollar was the result of Donald Trump’s intention to impose tariffs on China. The White House mentioned on Wednesday that they are urging China to cut its trade surplus with the United States by approximately $100 billion. This made investors and analysts concern about increased protectionism under Trump’s administration.  Stephen Innes, head of trading in Asia Pacific for OANDA in Singapore, mentioned that the fear of an escalating trade war with China had pushed global markets to the edge with investors shifting their stance to a defensive posture.

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