Oil prices deepen losses to a week trough on OPEC production forecasts
Global oil prices fell on Thursday and extended the losses for the second straight session, plumbing a week trough after a report about a potential July production hike by OPEC+, triggering oversupply concerns.
Prices are also pressured by higher US crude stocks for the second straight week, in a negative sign for demand in the world’s largest fuel consumer.
Prices
US crude fell 1.7% today to $60.27 a barrel, the lowest in a week, with a session-high at $61.71.
Brent tumbled 1.65% to $63.57 a barrel, a week low, with a session-high at $64.99.
On Wednesday, US crude fell 1.5%, while Brent shed 1.45%, the first loss in four days on profit-taking.
OPEC+
Bloomberg reported that OPEC+ is considering another large production hike in July.
The report showed that the hike is estimated at 411 thousand bpd, but no final agreement was reached yet.
OPEC is working on reducing its previous production cuts and adding large amounts of supplies to the market in May and June, with Reuters reporting that total production hikes until November could reach 2.2 million bpd.
US stock
Official data from the Energy Information Administration showed US crude stocks rose 2.5 million barrels in the week ending May 16, the second weekly rise in a row, while analysts expected a drop of 1.9 million barrels.
According to the data, total stocks rose to 448.6 million barrels, the highest since July 2024 in a negative sign for US demand.
US dollar tries to rebound ahead of crucial data
The US dollar rose in European trade on Thursday for the first time four days against a basket of major rivals, while trying to recoup from two-week lows on short-covering.
The gains come as concerns about US financial stability receded after the Republican-dominated House of Representatives passed Trump’s tax reform bill and sent it to the Senate.
Now investors await crucial US data later today, which could provide important clues on the path ahead for Fed interest rates.
The Index
The dollar index rose 0.25% today to 99.87, with a session-low at 99.44.
On Wednesday, the index lost 0.3%, the third loss in a row, plumbing two-week lows at 99.34 on concerns about US financial stability.
Fiscal Developments
The House of Representatives passed Trump’s tax reform bill in a huge victory for Republicans despite internal divisions, with the bill subjected to dozens of amendments to gain the support of ultra-conservative lawmakers.
The bill enacts huge tax cuts and raises the ceiling of the state and local tax deductions to $40,000, and imposes labor conditions on Medicaid beneficiaries starting 2026.
Despite passing the bill in the House, it still faces a complex path in the Senate as some Republicans there might demand even more changes.
US Rates
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
Now traders await a host of important US data later today, including unemployment claims and PMI data.
Gold expands gains to two-week high as dollar weakens
Gold prices rose in European trade on Thursday on track for the fourth profit in a row, hitting a two-week high as the dollar weakened against major rivals.
It comes after the US credit rating downgrade, which renewed concerns about the US financial stability and raised the challenges facing US policymakers.
The Price
Gold prices rose 0.9% today to $3345 an ounce, a May 9 high, with a session-low at $3309.
On Wednesday, gold rose 0.75%, the third profit in a row, as the dollar weakened against major rivals.
US Dollar
The dollar index fell 0.2% on Thursday on track for the fourth daily loss in a row, trading near a two-week trough at 99.34 against a basket of major rivals.
US President Donald Trump convened with his Republican allies in the House of Representatives but failed to convince them to support his tax reform bill, with hawks insisting the bill doesn’t cut spending far enough.
US President Donald Trump once again called on the Federal Reserve to cut interest rates in posts on his social media accounts.
Atlanta Fed President Raphael Bostic said earlier this week that he’s leaning towards a single interest rate cut this year.
According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in June stood at just 8%.
The odds of a 0.25%% Fed rate cut in July stood at 37%.
Traders now expect 50 basis points overall of Fed rate cuts this year, likely starting in October.
SPDR
Gold holdings at the SPDR Gold Trust fell by 1.72 tons on Wednesday to a total of 919.88 tons.
Bitcoin continues to shatter records above $110,000
Bitcoin rose on Thursday and expanded the gains for the third straight session, shattering new records after surpassing $110,000 for the first time ever.
It comes amid a huge surge on crypto assets amid optimism about US regulatory conditions that would be supportive to the industry.
The Price
Bitcoin rose 2% at Bitstamp to $111,888, a record high, with a session-low at $109,252.
On Wednesday, bitcoin rose 2.65%, the second profit in a row following a new round of corporate purchases.
Crypto Market Value
The market value of cryptocurrencies rose by over 110 billion on Thursday to a total of $3.629 trillion, a January high.
Bitcoin as a Safe Haven
Bitcoin is emerging as a haven for investors looking for alternatives to traditional US assets, which are facing severe fluctuations currently.
Concerns about the massive US fiscal deficit and lower demand on US treasury notes are bolstering shifts towards crypto assets such as bitcoin.
US Fiscal Developments
US President Donald Trump convened with his Republican allies in the House of Representatives but failed to convince them to support his tax reform bill, with hawks insisting the bill doesn’t cut spending far enough.
Weak demand on a recent US 20-year treasury note auction, and the “Sell America” mindset, also piled up on the dollar and Wall Street.
The markets are already on edge after Moody’s decision to cut the US credit rating by one notch.
Crypto trading platform Nexo’s co-founder Anthony Trenchef hailed a new period of optimism for bitcoin as it passed its January highs and rose over 50% from April lows.
He believes that bitcoin is entering its best historical years yet, with the $150,000 remaining a viable goal in 2025.