- Major oil firms have returned to their old days
- Euro bulls are further disappointed on the back of the French flash GDP
BP has shown that they will spare no expense to grow their business and made its biggest acquisition in almost two years. BP bought BHP Billiton Ltd’s onshore U.S oil and natural gas assets. The company paid 10.5 billion for this acquisition and this gives BP access to the crown jewel of BHP which is Permian Basin. This kind of acquisition tells you one thing; major oil firms have returned to their old days and they are out there to hunt. This is obviously because they feel more comfortable the future for oil demand is promising. At the same time, there is also another underlying message for investors that the industry is under a consolidation stage and it is eliminating competition.
From a technical perspective, the price has been consolidating mostly and the range has been $594-552. The price is above the 100 and 200-day moving averages which shows bulls strength.
In terms of the forex market, the euro bulls are further disappointed on the back of the French flash GDP q/q data which missed the forecast of 0.3% and came in at 0.2%. This unexpected stagnation is mainly happened due to the national trikes acted as a drag. Emmanuel Macron, the French president is putting the country through all the necessary reforms and it is natural that unions and workers would put up as many obstacles in his way as they can by going on strikes. But, France needs reforms and Macron is the person who would make that happen. The continuous sluggishness in the euro-zone due to the trade war concerns is also another reason that we have not seen the GDP picking up any pace.
However, the game isn't fully over yet for them as the upcoming US GDP q/q data may give them their hopes back. A weak US GDP number could push the dollar lower. But, we do think tax cuts and a spike in the soybean exports could help the US economy to report annualized growth in the Q2 to hit 4%. This would encourage the dollar bulls and of course the Fed. The Trump tweet would be inevitable as a result of this.