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What’s happening: Crude oil prices fell for the third day in a row on Wednesday, following the release of US stockpiles data.
What happened: The Energy Information Administration (EIA) reported a surprise increase in US crude inventories, which sent oil prices to a seven-week low.
Sticky inflation levels in the US also dampened prospects of economic growth driving oil demand ahead.
Why it matters: Data released on Wednesday showed that crude oil inventories in the US had risen by 7.265 million barrels in the week ending April 26. This marked the sharpest gain since early February and followed a decline of 6.368 million barrels in the previous week. The rise in stockpiles also came against expectations of a decline of 2.3 million barrels.
Late Tuesday, the API (American Petroleum Institute) had reported an increase of 4.9 million barrels in crude oil inventories.
The EIA also said that US crude oil production had risen to 13.15 million bpd (barrels per day) in February, from 12.58 million bpd a month ago. This was the sharpest monthly gain in around three-and-a-half years.
Gasoline stockpiles rose by 0.3 million barrels versus market expectations of a decline of 1.1 million barrels, while distillate stockpiles declined by 732,000 barrels.
The US Federal Reserve announced its policy decision on Wednesday, keeping interest rates unchanged. Lower rates drive economic growth and boost the demand for oil.
Weakness in the US dollar limited the overall losses for crude oil on Wednesday, as a lower 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, slipped around 0.4% to 105.76 on Wednesday.
Brent crude for July delivery lost $2.89 to reach $83.44 per barrel, while WTI crude oil for June delivery declined $2.93 to settle at $79 per barrel on Wednesday.
In other energy trading, wholesale gasoline for June delivery slipped 11 cents to $2.58 a gallon, while June heating oil declined 8 cents to $2.45 a gallon and June natural gas lost 6 cents to $1.93 per 1,000 cubic feet.
What to watch: Investors await the release of economic data on natural gas stockpiles from the EIA today. US natural gas supplies had risen by 92 billion cubic feet during the week ended April 19, recording the biggest gain in six months.
Investors will continue monitoring the US dollar and ongoing geopolitical concerns, which are expected to impact oil prices ahead.
Context: Shares of Pfizer gained on Wednesday after the company reported better-than-expected earnings for the latest quarter and raised its forecast.
Details: The pharma giant reported an overall decline in revenues for the first quarter, but still managed to top market estimates amid higher-than-expected sales of its covid-19 treatment Paxlovid.
Pfizer reported a sharp decline in the global sales of Comirnaty and Paxlovid. Comirnaty revenues contracted by 88% to $354 million. Although Paxlovid revenues also declined by 50% to $2 billion, they came in higher than market expectations of $878.2 million.
Pfizer’s overall sales fell 20% to $14.9 billion, but surpassed Wall Street expectations of $14.2 billion. Revenues excluding contributions from Comirnaty and Paxlovid rose 11% year-over-year to $12.5 billion.
“I am very pleased by the strong 11% operational revenue growth of our non-COVID products in the first quarter, demonstrating our focus on commercial execution. In addition, we continue to progress our cost realignment program and remain on track to deliver on our targeted cost savings goal by the end of the year,” CFO David Denton said.
Pfizer reported adjusted earnings of 82 cents per share, down 33% year-over-year. The figure topped the consensus estimates of 54 cents per share.
Management reiterated their revenue outlook of $58.5 billion to $61.5 billion for 2024. However, the guidance for adjusted earnings was raised from $2.05-$2.25 per share to $2.15-$2.35 per shares.
How shares responded: Pfizer’s shares jumped 6.1% to close at $27.18 on Wednesday, following the release of quarterly results. The stock has lost around 9% year-to-date.
What to watch: Investors will continue monitoring sales of Pfizer’s covid-19 treatment. Markets will also watch progress on the company’s cost cutting program.
Other Markets: US trading indices closed mixed on Wednesday, with the S&P 500 and Nasdaq 100 down by 0.34% and 0.70%, respectively, and the Dow Jones index up by 0.23%.
The US disclosed fresh sanctions on around 300 companies due to Russia’s ongoing war in Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
Australia’s building permits rose by 1.9% to 12,947 units in March, versus a 0.9% decline in February, exerting pressure on the AUD/USD forex pair.
The Hong Kong Monetary Authority held its base rate at 5.75% at its recent meeting, which sent the HKD/USD pair higher in forex trading this morning.
South Korea’s annual inflation rate eased to 2.9% in April, from 3.1% in the prior month. The latest reading being lowest since January lent support to the KRW/USD forex pair.
The Philippines said its manufacturing PMI surged to 52.2 in April, compared to March’s reading of 50.9. This being the highest reading in five months sent the PHP/USD pair higher in forex trading this morning.
Russia’s manufacturing PMI, Turkey’s manufacturing PMI and balance of trade, Spain’s manufacturing PMI and new passenger vehicles sales, Italy’s manufacturing PMI, new passenger car registrations and producer prices, France’s manufacturing PMI and new passenger car registrations, Germany’s manufacturing PMI and new passenger car registrations, Eurozone’s manufacturing PMI, South Africa’s manufacturing PMI and total vehicle sales, Mexico’s foreign exchange reserves, business confidence and government budget value, Brazil’s current account, foreign direct investment and manufacturing PMI, US Challenger job cuts, balance of trade, initial jobless claims, nonfarm business sector labor productivity, unit labor costs, continuing jobless claims, factory orders, Logistics Manager’s Index and total vehicle sales, Canada’s balance of trade, Singapore’s manufacturing PMI, Argentina’s tax revenue, as well as India’s money supply M3.
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