Crude oil declines after two days of gains

The news shaping the markets today

Former Ukrainian general Viktor Muzhenko said Russia might launch a new major attack over the summer. The safe-haven US dollar index rose this morning.

New Zealand’s building permits declined 9% to 3,206 in February, versus a 5.2% decline in the previous month. The news exerted pressure on the NZD/USD forex pair.

The Philippines said producer prices accelerated 3.6% year-over-year in February, the least since December 2021, versus a 4.4% rise in the previous month. The news sent the PHP/USD pair lower in forex trading this morning.

South Korea’s Business Survey Index for the manufacturing sector improved to 70 in March, from 63 in the prior month, lending support to the KRW/USD forex pair.

The Brazilian economy added a higher-than-expected net 241,785 formal jobs in February, which sent the BRL/USD pair slightly higher in forex trading this morning.

What’s happening: Crude oil settled lower on Wednesday, after recording gains on expectations of higher demand.

What happened: Traders looked to book profits after oil prices rose for two consecutive sessions.

Markets also monitored supply concerns after US crude stockpiles surprisingly fell last week.

Why it matters: Oil prices had dipped to a 15-month low on March 20, following turbulence in the global financial markets due to the collapse of two US banks and the emergency rescue of Credit Suisse by UBS.

The Energy Information Administration said that US crude oil inventories had contracted by 7.489 million barrels in the week ended March 24, representing the steepest decline since November 2022, with refineries increasing operations following maintenance. Markets had expected US stockpiles to rise by 0.092 million barrels in the week.

Crude stockpiles at the Cushing, Oklahoma delivery hub fell by 1.632 million barrels. Gasoline inventories contracted 2.904 million barrels, versus estimates of a decline of 1.617 million barrels, signalling upbeat demand in the summer season. Distillate stockpiles, however, increased by 0.281 million, versus expectations for a 1.455 million decline.

Russia’s oil production declined by about 300,000 barrels per day in the first three weeks of March, compared to targeted cuts of 500,000 barrels per day.

China’s crude oil imports are likely to increase 6.2% to 540 million tonnes in 2023, according to an annual forecast by a research unit of China National Petroleum Corp.

An upturn in the US dollar on Wednesday weighed on oil demand, as a rise in the greenback make commodities more expensive for foreign currency holders.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.2% to 102.64 on Wednesday.

WTI crude oil for May delivery declined 23 cents, or 0.3%, to settle at $72.97 per barrel on Wednesday, after recording gains earlier in the session. Brent crude for May delivery fell 37 cents to $78.28 per barrel.

In other energy trading, wholesale gasoline for April delivery slipped 4 cents to $2.67 a gallon, while April heating oil declined 11 cents to $2.66 a gallon. April natural gas shed 4 cents to reach $1.99 per 1,000 cubic feet.

What to watch: Traders will continue monitoring the state of the banking sector, which could impact oil prices. Markets will also keep an eye on the US Federal Reserve’s rate hike plans.

The EIA’s data on natural gas stockpiles will also remain in focus. US natural gas supplies, which declined by 72 billion cubic feet in the week ended March 17, is expected to contract by 54 billion cubic feet in the next week.

The markets today

US stocks will be in focus today ahead of a basket of economic reports

Context: US equities rose on Wednesday with strong gains in technology stocks.

Details: Regional banking stocks in the US edged higher on Wednesday, recovering from the downturn after the collapse of SVB and other banks. Shares of some big banks, including Citigroup and Goldman Sachs, also climbed during the session.

Big tech stocks recorded gains on expectations of the US Federal Reserve easing its monetary policy tightening measures. Shares of Amazon, Netflix and Apple adding more than 2% on Wednesday.

All 11 of the major sectors on the S&P 500 index ended Wednesday’s session in the green. Lululemon Athletica’s stock gained around 13% after the company posted stronger-than-expected results for its fourth quarter. Micron Technology’s shares jumped more than 7%, despite downbeat quarterly results, on expectations of the company being able to clear its inventories this year.

The Dow Jones index added 323.35 points, or 1%, to close at 32,717.60 on Wednesday. The S&P 500 rose 1.42% to 4,027.81, while the Nasdaq 100 gained 1.87% to reach 12,846.03.

What are expectations: Investors await the release of economic data on initial jobless claims, GDP growth rate and core PCE prices from the US today. The number of persons filing for jobless benefits, which declined by 1,000 to 191,000 in the week ending March 18, is expected to increase to 193,000 in the latest week. The US economy is projected to grow at an annualised rate of 2.7% in the fourth quarter. Analysts expect the core price index for personal consumption expenditures to increase by an annualised 4.3% in the fourth quarter, after 4.7% growth in the prior period.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.07%, 1.23%, 1.39% and 1.30%, respectively.

Support & resistances for today

Market snapshot

What else to watch today

South Africa’s private sector credit, money supply M3, producer inflation and South African Reserve Bank’s interest rate decision, Eurozone’s economic sentiment indicator, industry confidence indicator, selling price expectations, services confidence indicator, consumer confidence indicator, consumer confidence inflation expectations index, and ECB general council meeting, Spain’s consumer price inflation rate, retail sales and business confidence, Turkey’s economic confidence index, foreign exchange reserves and MPC meeting summary, Italy’s unemployment rate and producer price inflation, Canada’s CFIB business barometer long-term optimism index and average weekly earnings, Mexico’s unemployment rate and Bank of Mexico’s interest rate decision, Brazil’s Industrial production, general price index- market and industrial production, Germany’s inflation rate, US corporate profits and continuing jobless claims, Argentina’s consumer confidence indicator, as well as Australia’s house prices.