Account
New to ADSS? Open an
account now to get started.
Already have an account?
Add funds to your ADSS account
Account
New to ADSS? Open an
account now to get started.
Add funds to your ADSS account
What’s happening: Oil prices recorded gains on Monday amid prospects of tightening supplies.
What happened: Expectations of the US beginning to purchase oil for its SPR (Strategic Petroleum Reserve) lent support to oil prices on Monday.
However, concerns around a slowdown in the global economy limited the overall gains in crude.
Why it matters: Oil prices had declined for four straight weeks amid concerns around debt ceiling and a slowdown in the US economy. WTI crude oil shed 1.8% last week, while Brent crude lost 1.5%.
Wildfires in Alberta, Canada, resulted in the shutting down of supply of at least 300,000 barrels of oil equivalent per day last week. Oil prices trended higher on Monday on expectations that the situation could worsen. The wildfires had knocked out output of more than a million barrels of oil equivalent per day in 2016.
The Iraq-Turkey oil pipeline remains closed, after Turkey halted 450,000 bpd (barrels per day) of northern exports through the pipeline on March 25.
The US is expected to start repurchasing oil for its SPR after completing a mandated sale in June, which would boost demand for crude.
WTI crude oil for June delivery gained 1.07 to $71.11 per barrel on the NYMEX on Monday. July Brent crude added $1.06 to settle at $75.23 per barrel on ICE Futures Europe.
June gasoline gained 4 cents to $2.47 a gallon, while June heating oil added 7 cents to $2.38 a gallon and June natural gas rose 11 cents to $2.38 per million British thermal units on Monday.
What to watch: Traders will monitor the second round of debt-ceiling talks on Tuesday. The OPEC+ (Organization of the Petroleum Exporting Countries and allies) will also remain in focus, with the group looking to announce further output cuts. The group had said last month that some of its members would reduce production by another 1.16 million bps.
Markets also await the release of API’s (American Petroleum Institute) data on crude oil stockpiles, due to be released on Tuesday, as well as the EIA’s data on oil inventories, scheduled for release on Wednesday.
Context: The sterling recorded gains on Monday, moving back towards multi-month highs versus both the US dollar and the euro.
Details: The GBP/USD forex pair had climbed to a one-year high of 1.2679 during trading on Friday but fell sharply as the day progressed, mainly due to a rebound in the US dollar. Concerns around a slowdown in the global economy triggered purchases of the safe-haven US dollar.
However, weakness in the US dollar lent support to the GBP/USD forex pair on Monday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.24% to 102.43.
The Bank of England has raised its benchmark interest rate by 25 basis points last week. While future rate hike decisions would depend on upcoming data releases, markets expect another hike of 25 bps at the UK central bank’s next meeting.
The GBP/USD forex pair gained around 0.7% to 1.2530 on Monday. The sterling also gained versus the euro, adding around 0.4% to 86.80.
What are expectations: Traders await the release of economic data on unemployment rate, unemployment change and labour productivity from the UK today. The UK’s unemployment rate, which rose by 0.1 percentage points to 3.8% in the December to February quarter, is expected to remain unchanged in March.
The number of people in work had risen by 169,000 in the three months to February and is expected to increase by 120,000. Analysts project labour productivity rising by 0.2% in the first quarter, compared to 0.4% in the three months to December.
Other Markets: US trading indices closed higher on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.14%, 0.30% and 0.55%, respectively.
The UK is set to send more air defence missiles and armed drones to aid Ukraine in its war with Russia. The news sent sending the safe-haven US dollar index slightly higher this morning.
China’s retail sales grew 18.4% year-over-year in April, versus 10.6% growth in the previous month. However, the reading came in below market expectations of 21.0% and exerted pressure on the CNY/USD forex pair.
Australia’s Westpac-Melbourne Institute Index of Consumer Sentiment fell by 7.9% to 79.0 in May, following 9.4% growth in the earlier month. The news sent the AUD/USD pair lower in forex trading this morning.
South Korea’s export prices fell 7.5% year-over-year in April, after a 6.2% decline in the earlier month, exerting pressure on the KRW/USD forex pair.
Israel’s annual inflation came at 5% in April, above market expectations of 4.7%, and sent the ILS/USD pair lower in forex trading this morning.
Italy’s inflation rate, Eurozone’s balance of trade, employment change, GDP growth rate and ZEW indicator of economic sentiment, Germany’s ZEW economic sentiment index and ZEW current conditions index, South Africa’s unemployment rate, and unemployed persons, Canada’s inflation rate and manufacturing sales, US retail sales, Redbook index, industrial production, manufacturing production, capacity utilization, business inventories and NAHB/Wells Fargo housing market index, China’s foreign direct investment, as well as Turkey’s total motor vehicles production and vehicle sales.
ADSS
8th floor, CI Tower
Corniche Road
PO Box 93894
Abu Dhabi
United Arab Emirates
Trading Services
ts@adss.com
+971 2 657 2414
Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.
ADS Securities L.L.C – S.P.C (“ADSS”), a limited liability company – sole proprietorship company incorporated under United Arab Emirates law. Registered under Commercial License No.1190047. ADS Securities L.L.C S.P.C is regulated and authorised in the UAE by the Capital Market Authority (CMA) under Category 1 License No.305027 (Trading Broker, Trading and Clearing Broker, Trading Broker in the International Markets, Trading Broker of OTC Derivatives and Currencies in the Spot Market, Financial Products Dealer) and Category 5 License No.20200000217 (Introduction). Registered Office: 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.
The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.
ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.
