Drop in Oil Prices Reflects Market Pessimism
The Saudi led coalition bombings targeting heavy weapons positions was the first stage of operation New Hope – aimed at preventing Iranian control over Saudi Arabia’s maritime access point for global oil deliveries. News of the imminent ground incursion and crude stock figures from the API release yesterday saw prices drop overnight. Expectations of a 2.600 million barrel increase were doubled to 5.500 – the 15th straight week of inventory growth. EIA data due later in today’s session is expected to confirm the number, following a slackening of speed last week. WTI dropped below $56 in the morning session amidst heavy trading.
Interest rates in Australia are scheduled to be lowered, according to the country’s Central Banker, Glenn Stevens. With a developing real estate bubble, on one hand, and a mining sector slowly being crippled by falling demand – especially from major trade partner, China – overnight data showed a drastic decline in the CPI measure from 1.7% to 1.3%. To maintain growth amid a slackening global economy, further easing by the RBA may be necessary. Following the latest inflation data release, the AUDUSD pair rose by over 45 pips, as USD continues to pullback against its major peers.