Oil prices have accelerated the slump during late London session renewing two-month low due to concerns about persisting market glut and lower demand of crude oil by refineries.The rig count according to Baker Hughes rose by 14 rigs to 371 signaling US Shale producers expand drilling activity for the 4th consecutive week, spurring worries additional supplies from US will worsen the glut.On Monday WTI fell 2.06% to 43.28 per barrel, Brent declined 1.71% to 45.30 level. Worries on global oversupply slashed 4% from Brent price last week and 3.8% from WTI futures.
Net position on Crude Oil has been declining consecutively ten weeks according to the CFTC and fell by 5.2K to 289.6K from 294.8K signaling traders continue to build wagers on the fall. $40 floor look appealing for traders though upbeat API and then EIA data may trigger the bounce as it was seen last week as traders are looking for growth drivers despite gloomy sentiments.
Greenback index hit 97.62 on Monday as employment, housing and PMI data points on a stable footing of US economy, fanning speculations FED may return to hawkish rhetorics. Later during Monday trading the index erased gains returning to 97.41, though showing no significant bearish interest to the currency. Traders will focus on Fed Statement on Thursday to understand if FED sees headwinds in Brexit for the growth of US or turns focus on domestic data.
We expect US Dollar to extend growth ahead of the FED event as recent data shows traders increase bets on rate hike in this year and wait for confirmation from the US policymakers.