What’s happening: Crude oil prices edged higher on Thursday, as investors assessed the latest stimulus measures by China.
What happened: Investors continued to weigh concerns over global crude supplies against ongoing geopolitical concerns.
An unexpected decline in crude supplies last week lent some support to oil prices, which settled higher for the first time in five days.
Why it matters: Oil prices had risen steeply earlier this month on escalating geopolitical concerns, which sent the WTI to its strongest level since August.
Oil prices cooled for five straight days on prospects of an increase in supply from the OPEC+ (Organization of the Petroleum Exporting Countries and its allies).
On the demand side, traders were disappointed by the long-awaited stimulus measures from the Chinese authorities.
Oil prices received some support after the release of supply data from the Energy Information Administration. The EIA said that US commercial crude inventories had declined by 2.2 million barrels in the week ended October 11. This compared to market expectations of a gain of 1.7 million barrels.
Data also showed weekly gasoline supplies falling 2.2 million barrels and distillate supplies contracting 3.5 million barrels. Markets were expecting gasoline supplies to decline by only 1 million barrels and distillate supplies by 2.5 million barrels.
US oil production rose by 100,000 barrels to a record high of 13.5 million barrels per day (bpd) this week.
Strength in the US dollar limited the overall gains for 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 0.2% to 103.83 on Thursday.
WTI crude for November delivery rose by 28 cents, or 0.4%, to close at $70.67 per barrel on the NYMEX, while December Brent crude gained 23 cents, or 0.3%, to settle at $74.45 a barrel on ICE Futures Europe.
In other energy trading, November gasoline added 0.3% to reach $2.05 a gallon, while November heating oil rose 0.9% to $2.19 a gallon. Natural gas for November delivery bucked the trend and shed 0.8% to close trading at $2.35 per million British thermal units on Thursday.
What to watch: Investors await the release of data on Baker Hughes crude oil rigs today. Crude oil rigs in the US rose to 481 in the week of October 11, compared to 479 in the previous week.
Rising geopolitical concerns and data on the progress of the Chinese economy will also remain in focus.
Context: Equity markets in the US settled mostly higher on Thursday, as investors monitored the latest earnings and economic reports.
Details: Data released from the Commerce Department showed better-than-expected retail sales, while the Labor Department’s jobless claims came in below market estimates.
US initial jobless claims came in at 241,000 for the week ending October 12. This marked an unexpected decline of 19,000 from the previous week’s level of 260,000. Meanwhile, retail sales climbed by 0.4% in September, better than market expectations of 0.3% growth. The Philadelphia Fed Manufacturing Index also surged to a reading of 10.3 in October, from September’s 1.7.
Tech stocks, mainly those of chipmakers, were among the top gainers on Thursday, after Taiwan Semiconductor Manufacturing reported better-than-expected quarterly earnings and projected strong revenue growth in the fourth quarter.
Stronger-than-expected earnings reports from M&T Bank, KeyCorp and other banks also provided a boost to the stock of regional banks.
The Dow Jones index jumped 161.35 points, or 0.37%, to close at 43,239.05, while the Nasdaq 100 gained 0.08% to settle at 20,190.42 on Thursday. The S&P 500 slipped slightly by 0.02% to 5,841.47.
What to watch: Investors await the release of economic data on housing starts and building permits from the US today. Housing starts in the US, which surged by 9.6% to an annualised rate of 1.356 million units in August, are expected to rise by 1.8% in September.
Analysts expect building permits to decline 0.1% in September, following a 4.6% surge in the previous month.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.67%, 0.77%, 1.22% and 0.83%, respectively.
The US announced sanctions against China-based companies for producing “complete weapons systems” in partnership with Russian companies. The news sent the RUB/USD higher in forex trading this morning.
China’s retail sales grew 3.2% year-over-year in September, accelerating from 2.1% in the previous month. The latest reading also topped market estimates of 2.5% growth and lent support to the CNY/USD forex pair.
Japan’s annual inflation rate eased to 2.5% in September, from 3.0% in August. The latest reading being the lowest since April sent the JPY/USD pair higher in forex trading this morning.
The Central Bank of Egypt held its benchmark interest rate at 27.25% at its latest meeting, lending support to the EGP/USD forex pair.
Denmark’s central bank slashed its benchmark interest rate by 25 basis points to 2.85%, which sent the DKK/USD pair lower in forex trading this morning.
UK’s retail sales, Eurozone’s current account and construction output, Spain’s consumer confidence and balance of trade, Italy’s construction output and current account, South Africa’s value of building plans passed, India’s bank loan growth, foreign exchange reserves and deposit growth, as well as Argentina’s leading economic index and balance of trade.