Crude oil edges higher after last week’s losses

Today’s headlines

What’s happening: Crude oil prices rose on Monday after recording sharp losses last week.

What happened: Oil prices dipped more than 4% last week as US President Donald Trump’s efforts to end the ongoing war in Ukraine eased concerns over disruption in oil supply.

However, strength in the US dollar weighed on oil prices during Monday’s trading session.

Why it matters: Trump announced plans on Friday to meet Russia’s President Vladimir Putin on August 15 to hold talks to end the war in Ukraine. The negotiations follow higher pressure by the US on Russia, with intensifying threats of tighter sanctions.

Trump threatened Russia with secondary sanctions on major oil buyers like India in case no peace deal is reached.

On Monday, Trump said both Ukraine and Russia would have to swap some land in order to end the ongoing war.

UBS analysts slashed their Brent crude outlook for the yearend to $62 a barrel, from their previous forecast of $68 a barrel.

Strength in the US dollar exerted pressure on crude prices, as a higher greenback makes 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 0.4% on Monday.

WTI crude oil prices rose 8 cents, or 0.13%, to close at $63.96 a barrel on Monday, while Brent crude settled slightly higher by 4 cents, or 0.06%, at $66.63 a barrel.

In other energy trading, gasoline fell to $2.0766, while heating oil rose to $2.2910 on Monday. Natural gas bucked the trend and dipped to $2.954.

What to watch: Investors now await the monthly report from the OPEC (Organization of the Petroleum Exporting Countries) and projections from the US EIA (Energy Information Administration) and IEA (International Energy Agency).

EIA data on crude oil and gasoline inventories, due to be released on Wednesday, will also remain in focus. Crude oil inventories in the US contracted by 3.029 million barrels in the week ended August 1, compared to market estimates of a decline of 1.1 million barrels, while stockpiles of gasoline declined by 1.323 million barrels. Inventories of heating oil in the US fell by 0.456 million barrels in the week ending August 1, compared to a gain of 0.739 million barrels in the previous week.

The markets today

European stocks in focus today ahead of the ZEW economic sentiment index

Context: Equity markets in the Europe closed mostly lower on Monday, as investors assessed trade and geopolitical developments.

Details: Investors remained focussed on trade and geopolitical developments ahead of the meeting between US President Donald Trump and Russian President Vladimir Putin on Friday.

Shares of defence companies, including Rheinmetall and Renk, came under pressure on Monday, amid prospects of a peace deal in Ukraine.

Meanwhile, the European Central Bank ended its monetary policy easing cycle in July after announcing eight rate cuts over the past year, which brought borrowing costs to their lowest level since November 2022.

On the economic data front, Eurozone’s GDP expanded by 0.1% in the second quarter, while inflation level came in steady at 2% in July.

The STOXX Europe 600 Index fell 0.06% to close at 546.76 on Monday. Germany’s DAX 40 and France’s CAC 40 lost 0.34% and 0.57%, respectively. The FTSE 100 gained 0.37% to close at 9,129.71.

What to watch: Data on Eurozone’s ZEW economic sentiment index (1300 UAE Time) and Germany’s ZEW economic sentiment index (1300 UAE Time) will remain in focus today. The ZEW indicator of economic sentiment for the Eurozone, which climbed by 0.8 points to 36.1 in July, is expected to decline 28.1 in August. The ZEW indicator of economic sentiment for Germany, which surged for the third month to a reading of 52.7 in July, is projected to dip to 40 in August.

Markets will also monitor tariff-related announcements and talks between the US and Russia.

Other Markets: US trading indices closed lower on Monday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.45%, 0.25% and 0.36%, respectively.

The news shaping the markets

Ukraine’s President Volodymyr Zelenskyy held a call with India’s Prime Minister Narendra Modi to share his views on the latest developments related to the ongoing war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.

UK’s retail sales grew by 1.8% year-over-year in July, following 2.7% growth in June, lending support to the GBP/USD forex pair.

Mexico’s industrial output declined 0.7% year-over-year in June, following a 0.8% contraction in the previous month, which sent the MXN/USD pair lower in forex trading this morning.

South Africa’s manufacturing output surged by 1.9% year-over-year in June, following 0.7% growth in the previous month, which lent some support to the ZAR/USD forex pair.

Italy’s trade surplus widened to €5.41 billion in June, from €5.15 billion in the year-ago period, sending the EUR/USD pair higher in forex trading this morning.

What else to watch today

Spain’s 3-month Letras auction (1240 UAE Time) and 9-month Letras auction (1240 UAE Time), Germany’s ZEW current conditions (1300 UAE Time) and current account (1645 UAE Time), UK’s Treasury Gilt 2030 auction (1300 UAE Time), Italy’s 12-month BOT auction (1310 UAE Time), South Africa’s unemployment rate (1330 UAE Time), gold production (1330 UAE Time), mining production (1330 UAE Time) and unemployed persons (1330 UAE Time), US NFIB business optimism index (1400 UAE Time), Redbook index (1655 UAE Time), inflation rate (1630 UAE Time), WASDE report (2000 UAE Time) and monthly budget statement (2200 UAE Time), India’s inflation rate (1430 UAE Time), Brazil’s inflation rate (1600 UAE Time), as well as Canada’s building permits (1630 UAE Time).