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What’s happening: Crude oil prices settled lower on Wednesday, after recording sharp gains in the previous session.
What happened: China announced aggressive monetary stimulus measures, which triggered a strong rally in commodities on Tuesday.
A second weekly decline in a row in US crude stockpiles failed to lend support to oil prices on Wednesday.
Why it matters: China, the world’s biggest crude importer, announced its most aggressive stimulus plan since the covid-19 pandemic on Tuesday, providing a significant boost to oil prices on Tuesday.
The EIA (Energy Information Administration) said on Wednesday that US commercial crude inventories declined by 4.5 million barrels in the week ended September 20, due to supply disruptions following Hurricane Francine. The decline was much lower than market expectations of 8.4 million barrels.
Late Tuesday, the API (American Petroleum Institute) had said weekly crude inventories in the country had declined by 4.4 million barrels during the week.
Gasoline supplies fell 1.5 million barrels, while distillate supplies declined 2.2 million barrels last week. Analysts were projecting gasoline supplies to contract by 1.8 million barrels and distillate supplies by 2.5 million barrels. US oil production came in unchanged at 13.2 million bpd in the latest week.
The storm in the Gulf became a hurricane on Wednesday, which raised some supply concerns. Around 29.2% of the region’s oil production was closed, according to the Interior Department’s Bureau of Safety and Environmental Enforcement. Hurricane Helene is projected to hit Florida as Category 4.
WTI crude for November delivery dipped $1.87, or 2.6%, to close at $69.69 per barrel on the NYMEX (New York Mercantile Exchange), reaching the weakest level since September 13. November Brent crude declined $1.71, or 2.3%, to settle at $73.46 per barrel on ICE Futures Europe.
In other commodities trading, October gasoline declined 1.5% to settle at $2 a gallon, while heating oil for October fell 0.9% to $2.16 a gallon. Natural gas for October delivery bucked the trend and surged 3.4% to close at $2.64 per million British thermal units.
What to watch: Investors will continue monitoring Hurricane Helene, which is expected to result in supply disruptions. Data on natural gas stockpiles from the EIA will be released today. Analysts expect US natural gas stockpiles to increase 52 billion cubic feet in the latest week, compared to a gain of 58 billion cubic feet in the week ended September 13, 2024.
Context: US stocks settled lower on Wednesday, with the Dow Jones index snapping a four-session winning streak.
Details: Data released on Wednesday showed new home sales in the US declined 4.7% to 716,000 in August, compared to a reading of 751,000 in July.
Shares of both General Motors and Ford Motor declined more than 4% on Wednesday after analysts at Morgan Stanley downgraded their ratings on the stocks. Shares of Stitch Fix tanked more than 39%, after the company reported weaker-than-expected fourth-quarter earnings.
Nine of the 11 sectors on the S&P 500 index recorded losses on Wednesday, with energy stocks leading the plunge.
The S&P 500 fell 0.19% to settle at 5,722.26, while the Dow dipped 293.47 points, or 0.70%, to close at 41,914.75 on Wednesday, after both the indices hit new record levels earlier during the session. The Nasdaq 100 gained 0.14% to close at 19,972.61 during the session. All three major indices remain on course to record gains for September.
What to watch: Investors await the release of economic data on durable goods orders, initial jobless claims and GDP growth rate from the US today. New orders for manufactured durable goods in the US, which jumped by 9.9% in July, are expected to decline 2.6% in August.
Analysts expect real gross domestic product in the US to grow at an annualised pace of 3.0% in the second quarter, up from 1.4% in the previous quarter. The number of people claiming jobless benefits in the US, which fell by 12,000 to 219,000 in the week ending September 14, is expected to rise to 225,000 in the latest week.
Other Markets: European indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.17%, 0.41%, 0.50% and 0.11%, respectively.
US Secretary of State Antony Blinken announced fresh military assistance worth $375 million to help Ukraine in its ongoing war with Russia. The news sent the safe-haven US dollar index slightly higher in forex trading this morning.
Argentina’s economic activity estimator fell by 1.3% year-over-year in July, versus a 4% decline in June, exerting pressure on the ARS/USD forex pair.
Ukraine’s gross domestic product increased by 3.7% year-over-year in the second quarter, slowing from the 6.4% surge recorded in the previous period, which sent the UAH/USD pair lower in forex trading this morning.
Taiwan’s retail sales rose 1.1% year-over-year in August, easing from the 3.1% surge recorded in the previous month, which exerted pressure on the TWD/USD forex pair.
Brazil recorded a current account gap of R$6.6 billion in August, compared to a R$1 billion gap in the year-ago month. However, the BRL/USD pair rose slightly in forex trading this morning.
Germany’s GfK consumer climate, European Central Bank’s meeting, Spain’s retail sales, Eurozone’s loans to non-financial corporations, household credit growth and money supply M3, Italy’s business confidence and consumer confidence, South Africa’s producer price inflation, Turkey’s gross foreign exchange reserves and Central Bank of Turkey MPC meeting summary, Brazil’s producer price inflation and net payrolls, Canada’s wholesale sales, US continuing jobless claims, pending home sales, Kansas Fed composite index, Kansas City Fed’s manufacturing production index and Central Bank balance sheet, Argentina’s consumer confidence indicator, as well as Bank of Mexico’s interest rate decision.
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