The US crude turned lower as the US market opened on Wednesday, on profit taking after hitting a 3-month high earlier, after the American Petroleum Institute showed in preliminary an unexpected drop in US crude inventories, and ahead of EIA weekly report later today.

The US crude fell 2.5% to $35.91 a barrel, after it opened at $36.83, and hit an intraday high and the highest since March 9 of $38.15.

The US crude gained 3.6% yesterday, posting the fourth daily gain, on hopes for OPEC-Plus coalition to extend its output agreement.

The American Petroleum Institute (API) revealed yesterday in preliminary data the US crude inventories fell 0.483 million barrels during the week ending in May 29, beating than forecasts of a rise by 3.5 million barrels, in a positive sign of the demand and consumption levels in the US after easing the coronavirus lockdown.

While the US Energy Information Administration (EIA) will release today the official data on inventories and production levels in its weekly report, with forecasts for inventories to rise by 3 million barrels.

As for the US production it fell 100,000 barrels to 11.4 million barrels per day, the lowest level since the week ending July 19, 2019.

Oil prices continued to rally on Wednesday for the fifth day in a row, hitting a 3-month high, as Brent crude jumped above $40 a barrel for the first time since March, on hopes for OPEC-Plus coalition to extend its output agreement in the next meeting of this week and strong Chinese data on the services sector, and after the American Petroleum Institute showed in preliminary an unexpected drop in US crude inventories.

The US crude rose 3.6% to the highest since March 9 at $38.15 a barrel, after it opened at $36.83, and hit an intraday low of $36.82, and Brent crude rose 2.25% to the highest since March 6 at $40.51 a barrel, after it opened at $39.62, and hit a low of $39.62.

The US crude gained 3.6% and Brent futures gained 2.6% yesterday, posting the fourth daily gain, on hopes for OPEC-Plus coalition to extend its output agreement.

OPEC and independent allies led by Russia, known as the OPEC-Plus coalition, will hold an online video conference meeting on Thursday, to discuss the latest developments in the market, and member's compliance to the output cut.

Saudi Arabia is trying to convince the coalition to extend the current cuts for another month or two, to reach a more effective market balance and support the prices.

The OPEC-Plus coalition started implementing a global production cut by 9.7 million barrels per day, and will continue until June, but the cut will be reduced to 7.7 million bpd from July until the end of 2020, and will be reduced again to 5.7 million bpd starting in January 2021 to April 30, 2022.

The Saudi proposal is to extend the current cuts of 9.7 million barrels until the end of July or August, which appears to be accepted by most of the OPEC-Plus members.

Saudi Arabia has confirmed that it will cut its oil production starting from June by 1 million barrels per day in addition to its share in the OPEC-Plus cut agreement, which is around 40% of the total Saudi production to reach 7.5 million bpd.

Data showed that the Chinese services sector grew 55 points in May, beating forecasts of 47.4 points, and higher than 44.4 points in April, which raised hopes about the recovery of the world's second largest oil consumer from the coronavirus impact.

The American Petroleum Institute (API) revealed yesterday in preliminary data the US crude inventories fell 0.483 million barrels during the week ending in May 29, beating than forecasts of a rise by 3.5 million barrels, in a positive sign of the demand and consumption levels in the US after easing the coronavirus lockdown.

While the US Energy Information Administration (EIA) will release today the official data on inventories and production levels in its weekly report, with forecasts for inventories to rise by 3 million barrels.

Gold prices fell on Wednesday, extending losses for the second straight day, to pullback from a 2-week high on profit-taking and weak safe-haven demand, as most global stocks rallied today.

Gold fell 0.8% to $1,713.02 an ounce, after it lost 0.75% yesterday, posting its first loss in 5 days, on profit-taking a 2-week high of $1,745.09.

Most global stock markets continued to rally, as investors sentiment improved thanks to the continued major economies reopening measures and relaxing the coronavirus-lockdown, and hopes for a quick global economic recovery from the coronavirus impact, in addition to  strong Chinese services data. 

Data showed that the Chinese services sector grew 55 points in May, beating forecasts of 47.4 points, and higher than 44.4 points in April.

According to the data, the Chinese service sector returned to a growth path in May, after 3 months of stagnation due to the coronavirus lockdown, which raised hopes about the recovery of the world's second largest economy.

The market sentiment also drew support from the continued efforts made by global central banks to expand unprecedented financial and monetary stimulus programs to ease the coronavirus pandemic economic impact.

Gold stocks at the SPDR ETF rose 0.88 metric tonnes yesterday, with the total at the highest level since May 2013 at 1,129.28 metric tonnes.

The US dollar fell on Tuesday, hitting a 3-month low, and deepening its losses for the seventh straight day, as demand slowed and risk appetite improved, in addition to fears over the protests and riot in the US, which comes ahead of key data releases that provide insight on the performance of the US economy after easing the coronavirus lockdown.

The dollar index fell 0.3% to the lowest since March 12 at 97.29 points, after opening at 97.57, and hit an intraday high of 97.63.

The greenback lost 0.15% yesterday, its sixth daily loss, as demand slowed due to the escalation of protests and riot in the US.

Most global stock markets continued to rally, as investors sentiment improved thanks to the continued major economies reopening measures and relaxing the coronavirus-lockdown, and hopes for a quick global economic recovery from the coronavirus impact, in addition to  strong Chinese services data. 

US President Donald Trump has threatened to deploy the military to stop the riots and protests across the US, which have broke out to denounce racism and police brutality, and the Pentagon confirmed the deploying about 1,600 soldiers in the Washington after several nights of riots.

Large-scale protests and riots across the US escalated after the killing of the American citizen, George Floyd, who died in the Minneapolis police custody, after a white cop put him on the ground under his knee for about 9 minutes.

Should the protests and riot continue for a longer time, it's expected to weigh down further on the battered US economy that already suffers from the coronavirus impact.

Investors are anticipating key economic data releases today on the US  private sector jobs and the services sector, which will deliver insight on the performance of the US economy after easing the coronavirus lockdown.

At 12:15 GMT, the US economy will release its reading for the ADP Non-Farm employment change, with forecasts of losing 9 million in May vs. 20.236 jobs lost in April. 

At 14:00 GMT, the ISM services PMI is expected to rise to 44.2 points in May vs. 41.8 points in April.