15.07.2019: Oil traders disappointed by GDP data from China (Brent, RUB, USD)

On the last day of the previous trading week, oil prices were stable at the levels that had been reached amid a fall in oil production in the United States due to the tropical storm threat, a decline in crude oil stockpiles, and tensions in the Middle East.
On Friday, the Brent crude benchmark rose to the closing quotes of Thursday. At the start of the new week, oil prices were consolidating in the same trading range. In the short term, Brent futures are expected to advance to 68 dollars per barrel, but in the middle term the price is likely to retreat to the channel between 65.50 and 67.00 levels.
Last Friday, Baker Hughes released the oil rig count report, showing that the number of active drilling facilities in the United States came in at 784 units. It was the lowest figure for the past 17 months.
The oil rig count report is a leading indicator of the oil output in the future. Therefore, a fall in the number of active oil rigs is a sign that the production volumes in the United States is likely to decrease in the second half of the year.
Overall, a positive sentiment prevails on the market today. However, worries over a slowdown in the global economic growth may intensify at any moment and dent the optimism.
Oil prices may decline amid the GDP data from China that showed the slowest pace of economic growth for the past 27 years. It reinforces concerns over the sluggish demand from the biggest oil consumer. In the second quarter, the gross domestic product expanded by only 6.2% in annual terms. The ongoing trade conflict between the United States and China puts a strain on the Chinese economy.
Meanwhile, currencies of the emerging markets gained ground as investors hope that the United States and China will finally resolve the trade conflict. It provided support to EM currencies including the Russian ruble. Despite the new US sanctions that ban operations with the Russian debt securities for US citizens, the dollar-ruble pair opened this week near the level of 62.80. The ruble appreciated by 0.55%. Moreover, the tax period in Russia that starts this week and expectations of a rate cut by the Federal Reserve have also provided support to the Russian currency.
Dovish statements of Fed Chairperson Jerome Powell assured market participants of a possibility that the financial regulator will reduce the interest rate by 25 basis points at the nearest monetary policy meeting. Consequently, the US dollar may weaken across the board.
We keep close tabs on the market developments. Stay tuned!

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