The June USOil contract is down 1.7% at $50.60, which breaks a three week bull run and stands as the biggest one-day drop since May 4. Prices earlier tested the key $50.00 handle. The losses have been seen after the Saudi energy minister said earlier that it is “highly likely… that we’re going to roll over with the same terms over a nine-month period,” with regard to the OPEC-led output cut. This would extend the existing accord for a 1.8 mln barrels-per-day supply reduction from the end of June through to the end of March next year. The so-called Vienne Group, which is OPEC nations plus allied oil producing nations, most notably Russia, are meeting today, and a formal announcement is expected later. The sell-off in crude markets appears to be an on-the-fact style market reaction following speculation in the run up to the meeting.
Meanwhile the greenback has found its feet after posting fresh post-FOMC minutes lows during the early part of European trading. USDJPY rose to the 111.90 area, up from the post-FOMC minutes low at 111.48. EURUSD logged a two-session high at 1.1250 during the London AM session before ebbing into the low 1.12s. The pair still remained comfortably above the levels prevailing before the release of the FOMC minutes yesterday, with the less hawkish than anticipated tone have imparted an overall softer bias on the dollar. Incoming U.S. data will be scrutinized with this in mind, in addition to Fed speakers, with signs of the expected firming up of economic activity needed to revive the dollar. Sterling took a knock on disappointing UK growth data, with Cable tumbling under 1.2960 from pre-release levels just above 1.3000, swinging yesterday’s 1.2927 low back into the frame and confirming the 1.2984 pivot level.
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