Investors await OPEC+ meeting, EU inflation and US job report

On Wednesday, oil prices remain cautiously steady around multi-year highs ahead of the OPEC+ meeting. The dollar index extended its losses for the third day in a row as traders are waiting for EU inflation data and US job reports.

The euro gained ground on Wednesday as Eurozone yields soared, with German 10-year yields hitting their highest level since mid-2019 following high inflation data that sparked speculation that ECB may tighten its monetary policies earlier this year. Despite lower-than-expected PMIs, solid job data and a higher inflation print in Germany have contributed further to the step-up in euro-zone interest rate expectations. The price of crude oil is hovering around seven-year highs this morning after a decrease in U.S. crude inventories sent a mixed picture last night. This week's API report showed a decline of 1.645 million barrels in crude inventories, which is below expectations, but almost double the decline of 0.872 million barrels from the week before.

OPEC+ meeting and EIA report

However, investors remain cautious ahead of an OPEC+ meeting that will take place later in the day. The cartel is expected to discuss production levels. Since last August, it has been planned to increase production by 400,000 barrels per day. OPEC+ is likely to stick to its plan. Investors also watch the upcoming EIA report on crude inventories. It may further confirm that the demand is strong if the increase in inventories is slower than expected.

EU inflation figures

While market watchers are not expecting any changes to monetary policy from the ECB this week, European inflation growth is expected to slow in January and retreat from its 30-year peak of 5% to 4.4%.

US job data

With the NFP ahead on Friday, many traders are waiting for the ADP to report a change in nonfarm employment changes in January. In the wake of the Federal Reserve's announcement that it would hike interest rates for the first time in March, speculation continues about the actual amount of increase. If labour market data remains strong, tightening policies may accelerate. Only 207,000 new jobs are expected to be created in January, well below the 807,000 in December.