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Trends & Analysis
News

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News

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News

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News

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US big banks report better-than-expected earnings

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Crude oil declines despite supply concerns

Wednesday, March 27, 2024

Today’s headlines

What’s happening: Crude oil futures edged lower on Tuesday as investors assessed the supply outlook.

What happened: Crude oil prices came under pressure on Tuesday after recording gains in the prior session amid the latest attacks by Ukraine on Russia’s refineries.

Volatility in the US dollar also weighed on crude prices.

Why it matters: Oil prices ended a three-session losing streak on Monday, following continued attacks by Ukraine on Russia’s oil refineries. Brent crude gained 1.5% on Monday, while US crude prices added 1.6%.

Following drone strikes on its oil refineries, Russia also increased its attacks on the energy infrastructure of Ukraine.

Moreover, the Russian government ordered companies to slash their output during the second quarter in order to meet the target of 9 million bpd (barrels per day) for complying with pledges to the OPEC+ (Organization of the Petroleum Exporting Countries and its allies).

India, which has been among the important purchasers of Russian oil, is seen facing issues in buying big quantities due to the latest US sanctions.

The US dollar remained volatile on Tuesday. The greenback spiked in early trading but closed almost flat. Strength in the US dollar makes commodities, including oil, more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, ended trading at 104.23 on Tuesday.

Late Tuesday, the American Petroleum Institute said that US crude oil stockpiles had climbed by 9.337 million barrels in the week ending March 22, compared to a decline of 1.519 million barrels a week ago. Excess supply in the US exerted pressure on oil prices.

WTI crude for May delivery declined 33 cents to close at $81.62 a barrel on the NYMEX (New York Mercantile Exchange). May Brent crude, the global benchmark, fell around 50 cents to $86.25 a barrel on ICE Futures Europe.

In other energy trading, wholesale gasoline for April delivery declined 5 cents to $2.70 a gallon, while April heating oil slipped 6 cents to $2.62 a gallon and April natural gas lost 4 cents to close at $1.58 per 1,000 cubic feet on Tuesday.

What to watch: Investors await the release of data on crude oil inventories, gasoline stockpiles and distillate stocks from the EIA (Energy Information Administration) today. Crude oil inventories in the US, which declined by 1.952 million barrels in the week ended March 15, are expected to contract by 1 million barrels in the recent week.

Analysts expect US gasoline stockpiles to decline by 1.8 million barrels in the latest week, compared to a decline of 3.31 million barrels a week ago, while distillate inventories are projected to increase by 1 million barrels in the week, after rising by 0.624 million barrels in the week ended March 15.

Markets will continue monitoring rising geopolitical concerns, which are expected to significantly impact oil prices ahead.

The markets today

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

Context: European equity markets settled higher on Tuesday, after recording losses earlier in the session.

Details: Investors continue monitoring the European Central Bank’s monetary policy outlook. Traders widely expect the ECB to cut its benchmark interest rate by 25 basis points (bps) in June.

On the economic data front, the GfK Consumer Climate Indicator for Germany rose to -27.4 heading into April, compared to -28.8 in the earlier period. The figure was also better than market estimates of a reading of -27.9.

The S&P Global slashed the Eurozone’s 2024 growth forecast by 0.1%, while the OECD and IMF also adjusted their expectations to 0.6% and 0.9%, respectively.

Shares of Ocado gained around 3% on Tuesday, after the grocery delivery service reported 10.6% year-over-year revenue growth at its retail division in the first quarter. ASOS shares climbed around 7% after the online fashion retailer reported an improvement in cash flows during the first half of the year.

The STOXX Europe 600 Index rose by 0.24% to close at 511.09 on Tuesday, erasing losses recorded earlier in the session. Most sectors closed in the positive zone, with retail stocks gaining 1.5%. Mining stocks bucked the overall market trend, falling 0.5%.

London’s FTSE 100 gained 0.17% to close at 7,930.96 on Tuesday, notching the strongest level in over a year. Germany’s DAX 40 rose 0.67% to 18,384.35, while France’s CAC 40 added 0.41% to settle at 8,184.75.

European markets will remain closed on Friday and Monday for the Easter holidays.

What to watch: Investors await the release of the economic sentiment indicator, consumer confidence indicator and services confidence indicator from the Eurozone today. The Eurozone’s economic sentiment indicator, which fell to 95.4 in February, is expected to increase to 96.3 in March.

Analysts expect the consumer confidence indicator to improve by 0.6 points to a reading of -14.9 in March, while the services confidence indicator is projected to increase to 7.8 in March, from 6 in February.

Other Markets: US trading indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.08%, 0.28% and 0.36%, respectively.

The news shaping the markets

French Defence Minister Sebastien Lecornu said the country will soon provide 78 Caesar howitzers to Ukraine. The news sent the RUB/USD slightly lower in forex trading this morning.


Argentina’s economic activity estimator shrank by 4.3% year-over-year in January, compared to a 4.5% decline a month ago, exerting pressure on the ARS/USD forex pair.


Australia’s monthly Consumer Price Index indicator came in unchanged from the prior month at 3.4% in the year to February, sending the AUD/USD pair lower in forex trading this morning.


India’s current account deficit shrank to $10.5 billion in the October-December period, versus a $16.8 billion gap in the year-ago quarter, which lent support to the INR/USD forex pair.


South Korea’s Business Survey Index for the manufacturing sector rose to 71 in March, from 70 a month ago. However, the KRW/USD pair fell in forex trading this morning.

What else to watch today

France’s consumer confidence indicator, initial jobless claims and unemployed persons, Spain’s consumer price index, retail sales, industry confidence indicator and current account, Italy’s construction output, Eurozone’s consumer inflation expectations index, industry confidence indicator and gauge for selling price expectations, Brazil IGP-M inflation, nonfarm payrolls and government budget value, US MBA mortgage applications, Mexico’s balance of trade and unemployment rate, South African Reserve Bank interest rate decision, Argentina’s consumer confidence indicator, as well as Russia’s industrial production and monthly GDP.


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