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What’s happening: Crude oil prices settled higher on Wednesday amid rising geopolitical tensions.
What happened: Oil prices rose on speculation that heightened geopolitical concerns could significantly affect crude supplies.
A large increase in US crude stockpiles limited the overall gains for oil prices on Wednesday.
Why it matters: Crude oil prices rose more than 2% on Tuesday and extended gains during Wednesday’s session amid escalating geopolitical concerns.
An increase in US oil inventories weighed on oil prices. The Energy Information Agency said on Wednesday that US crude stockpiles had climbed by 3.889 million barrels during the week ended September 27, versus market estimates of a decline of 1.3 million barrels. Crude stockpiles at the Cushing, Oklahoma delivery hub rose by 0.840 million barrels last week.
Data also showed gasoline stockpiles rising by 1.119 million, versus market expectations of a decline of 0.1 million barrels. Distillate stockpiles, including diesel and heating oil, fell by 1.284 million barrels, lower than market estimates of a decline of 1.5 million barrels.
Strength in the US dollar also impacted oil 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 0.5% to 101.68 on Wednesday.
Brent futures rose 34 cents, or around 0.4%, to close at $73.90 per barrel, while US WTI crude oil added 27 cents, or around 0.3%, to settle at $70.10 per barrel on Wednesday. Both crude standards had jumped more than 3% earlier in the session.
In other commodities trading, November gasoline rose to $1.9859 a gallon, while November heating oil settled higher at $2.1821 a gallon. Natural gas for November delivery closed at $2.886 per million British thermal units on Wednesday.
What to watch: Investors will continue monitoring ongoing geopolitical concerns, which are expected to significantly impact oil prices ahead. Data on natural gas stockpiles from the EIA will also remain in focus. US natural gas stockpiles had risen by 47 billion cubic feet in the week ended September 20, compared to market estimates of a gain of 52 billion cubic feet.
Context: Equity markets in Europe closed mixed on Wednesday, as investors assessed the latest unemployment data from the Eurozone.
Details: Data released on Wednesday showed Eurozone’s unemployment rate remaining unchanged from the previous month, at 6.4%. August’s data release marks the lowest unemployment rate since the Eurozone came into existence in 1999. September’s unemployment reading matched market expectations.
The number of unemployed people in the Eurozone fell by 94,000 to 10.925 million in August.
The STOXX Europe 600 Index gained 0.05% to close at 521.14 on Wednesday, with oil and gas stocks among the top performers during the session. Tech stocks also rose, with shares of ASML and Prosus settling higher on Wednesday. Stocks of utilities were the worst performers, down around 1.8% during the session.
Shares of JD Sports fell around 6% on Wednesday, despite the British sports retailer reporting better-than-expected sales and earnings for the first half. The stock came under pressure after Nike, one of the leading brands sold by JD Sports outlets, issued a downbeat revenue guidance.
London’s FTSE 100 gained 0.17% to close at 8,290.86 on Wednesday. Germany’s DAX 40 fell 0.25% to 19,164.75, while France’s CAC 40 added 0.05% to settle at 7,577.59.
What to watch: Investors await the release of economic data on producer price inflation, composite PMI and services PMI from the Eurozone today. The HCOB Eurozone services PMI is expected to decline to 50.5 in September, from 52.9 in the previous month, while composite PMI is projected to decline for a fourth straight month to a reading of 48.9 in September.
Analysts expect producer prices in the Eurozone to rise by 0.3% in August, after a 0.8% increase in July.
Other Markets: US trading indices closed slightly higher on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.09%, 0.01% and 0.15%, respectively.
Russia’s military forces have captured the key hilltop town of Vuhledar in eastern Ukraine. The news sent the RUB/USD pair slightly higher in forex trading this morning.
Singapore’s S&P Global PMI declined to 56.6 in September, from around a two-year high level of 57.6 in August, exerting pressure on the SGD/USD forex pair.
Australia’s Judo Bank Composite PMI Output Index dipped to 49.6 in September, from 51.7 in the previous month. Manufacturing output falling to the contraction zone sent the AUD/USD pair lower in forex trading this morning.
Japan’s au Jibun Bank services PMI was revised to a three-month low of 53.1 for September, from an initial estimate of 53.9, which exerted pressure on the JPY/USD forex pair.
Mexico’s S&P Global manufacturing PMI declined to 47.3 in September, from 48.5 in the previous month, which sent the MXN/USD pair lower in forex trading this morning.
Russia’s composite PMI, services PMI and unemployment rate, Turkey’s inflation rate, producer price inflation, total motor vehicles production, total vehicle sales and gross foreign exchange reserves, South Africa’s S&P Global PMI, Spain’s composite PMI and services PMI, Italy’s composite PMI and services PMI, France’s composite PMI and services PMI, Germany’s composite PMI and services PMI, UK’s composite PMI and services PMI, Mexico’s foreign exchange reserves, US Challenger job cuts, initial jobless claims, continuing jobless claims, S&P Global composite PMI, S&P Global services PMI, ISM services PMI and factory orders, Brazil’s composite PMI and services PMI, Canada’s composite PMI and services PMI, as well as Argentina’s tax revenue.
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