Today's oil prices fell close to 2 percent on Friday amid worsening global economic prospects after the European Central Bank warned about continued weakness and new data showed China's imports and exports slumped last month. With soaring US oil supplies also disrupting markets, benchmark international Brent crude futures lost $ 1.22, or 1.9 percent, to $ 65.08 a barrel at 1040 GMT. Didimax offers more trading news for you to learn forex.
Oil Declines 2%, Economic Outlook Weakens
West Texas Intermediate (WTI) US crude futures fell 96 cents, or 1.7 percent, to $ 55.71. Financial markets, including crude oil futures, were hit after comments on Thursday from ECB President Mario Draghi, said the European economy was in a period of ongoing weakness and widespread uncertainty. The weakness of the European economy came because growth in Asia also slowed.
So far oil demand has persisted, especially in China, where crude oil imports remain above 10 million barrels per day. But the slowdown in economic growth is likely to reduce fuel demand and reduce prices at some point. February exports in Chinese dollars fell 21 percent from a year earlier, representing the biggest decline in three years and far worse than analysts had expected, while imports fell 5.2 percent, official data showed on Friday.
On the supply side, crude oil has received support this year from production cuts led by the Organization of Petroleum Exporting Countries. This effort is being undermined by soaring US crude oil production, which has risen by more than 2 million barrels per day from the start of 2018 to 12.1 million barrels per day which is unprecedented. That makes America the largest producer in the world, above Russia and Saudi Arabia.
Dovish ECB Expresses Slow Economy
The USD/JPY continued its weakness in trading Friday after US Treasury yields weakened due to the decision of the European Central Bank (ECB) to postpone interest increases until 2020, from the original plan this year. In addition, the ECB issued a long-term soft loan program to banks to push the inflation rate towards the target of 2 percent. Learn forex more with this kind of trading news.
Previously safe haven sentiment also hit the pair on Thursday because the OECD agency cut its forecast for global economic growth this year. TLTRO, short for targeted longer-term refinancing operations or targeted long-term refinancing operations, is one of the ECB's non-standard monetary policy tools. Through TLTRO, the ECB provides long-term loans to banks and offers them incentives to increase their loans to businesses and consumers in the euro area.
This program helps to return the inflation rate to below levels but approaches 2% in the medium term. The first TLTRO series was launched in 2014. The second series, introduced in March 2016, is called TLTRO-II and the latest is TLTRO-III. The ECB decision confirmed that the global economic condition was indeed slowing down. Trading news on Didimax will help you learn forex.
EUR/USD Moves Near Low Level 21 Months
The movement of EUR/USD was still held around a 21-month low in early trading Friday, weighed by dovish signals from the European Central Bank, with currency markets preparing for further volatility ahead of US employment data later tonight. EUR/USD suffered a blow on Thursday after the ECB again pushed the time for the first post-crisis interest rate increase to 2020, slashing economic forecasts and launching a new round of cheap loans to banks.
Optimistic data on US employment will be released at 20:30 WIB which can put further pressure on EUR/USD. Economists surveyed by Reuters predicted the US would add 180,000 workers last month, after two months of surprising growth. The US economy in January added 304 thousand workers and in February added 222 thousand.
