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Downtrend in oil prices continues (Brent: $49.6)

Oil prices shortly touched $50 yesterday, but are back in the forties this morning as markets are focusing on potential Brexit and various central bank data releases in the coming days.

In its monthly report, published yesterday, OPEC stated that the group of oil producers expects a more balanced global oil market in the second half of 2016. Likely a sign that the organisation's strategy of maintaining market share by refusing to curb output is working, even though oil prices have increased almost 100% since January's oil price low of $27. The report showed a slight decrease in OPEC oil output by 100,000 barrels per day in May to 32.36 mio. barrels per day (from 32.46 mio. bpd. in April). OPEC predicts non-OPEC supply to drop by 740,000 barrels per day this year. The largest OPEC member, Saudi Arabia, increased its output in May to 10.27 mio. bpd (from 10.262 in April) which is 6-month highs. Production in Nigeria, Venezuela and Iraq decreased.

Later today, the weekly oil stocks data from the American Petroleum Institute will be published ahead of tomorrow's more closely watched report from the EIA. Consensus is a 2.2 mio. barrels' drop in crude oil inventories, smaller drops in distillates and gasoline stocks. The recent increases in the number of active drilling rigs, registered by Baker Hughes, are, however, pointing towards a potential turning the shale oil taps back on, so volatility ahead of the releases will likely be high.

Besides tomorrow's U.S. central bank statement and interest rate decision, financial markets are increasingly focusing on a potential "Brexit"; UK citizens voting to stay or leave the EU on 23 June. Both the "remains" and "leaves" are extremely close, so anything can happen in this respect. A potential exit by the UK from the European Union could further pressure the fragile European economic situation.