Oil In Retreat As Kuwaiti Strike Ends; Pound Steadies

Oil prices slipped back on Wednesday after the Kuwaiti oil strike came to an end on Tuesday. Workers in Kuwait’s oil industry had been on a three-day strike over pay, causing a major disruption to the country’s production of crude oil. The cut in output had provided a temporary support to oil prices on Monday and Tuesday after talks between major producers to freeze production had ended unsuccessfully.

WTI oil futures were down over 2% at $41.55 a barrel in late Asian trading today. Other commodities such as gold and copper also headed lower after yesterday’s impressive gains. Gold was down at $1249 an ounce from an earlier one-week high of $1257.81. Copper prices eased from three-week highs to slide to $2.2060 per pound. Silver prices bucked the trend however and continued to set fresh one-year highs, and were last trading just below $17 an ounce.

Commodity currencies pulled back from yesterday’s highs on the weaker oil prices. The Australian dollar dropped below 0.78 versus the US dollar in late Asian session, while the New Zealand dollar was hovering around the 0.70 level.

The kiwi was boosted yesterday from a combination of steady oil futures and a rise in dairy prices from the latest global dairy auction.

In other currencies, the Japanese yen was slightly firmer on Wednesday, helped by better-than-expected export figures. Exports declined by a smaller-than-expected 6.8% year-on-year rate in March, while imports also beat forecasts. However, the overall monthly trade surplus fell short of estimates at 755 billion yen.

The US dollar fell back below 109 yen to decline to 108.90 yen in late Asian trading. However, the euro was flat against the dollar around $1.1360.

The pound was steady against the greenback but off yesterday’s highs. The British currency was boosted yesterday from a new poll that put the ‘remain’ camp in the EU referendum ahead of the ‘leave’ campaign. Sterling reached a three-week high of 1.4418 dollars on Wednesday but was trading around 1.4376 today.

In the meantime, Bank of England Governor Mark Carney told a House of Lords committee yesterday that uncertainty about the UK’s EU membership had already started having an impact on the British economy, including a fall in the value of sterling and a big drop in property transactions.

Coming up later today, UK jobs numbers and US existing homes sales will be the main data of the day, along with the latest US oil inventories. Also to watch for will be speeches by the ECB’s Draghi, the Bank of England’s McCafferty and the Bank of Canada’s Poloz.

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