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Trends & Analysis
News

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News

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GBP/USD recovers following wage report

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News

Crude oil falls to August lows

Friday, October 06, 2023

Today’s headlines

What’s happening: Crude oil closed lower on Thursday, following release of data on gasoline inventories.

What happened: Oil futures settled at their weakest level since August, after data released on Wednesday showed a large build in US gasoline inventories.

News out of Russia regarding its diesel ban added further pressure on crude oil prices.

Why it matters: Oil had been on an uptrend in September. However, crude prices have declined for five of the last six sessions, with investors booking profits after the rally.

On Wednesday, crude tanked, recording the biggest single-session selloff of the year, after the EIA (Energy Information Administration) said that US gasoline inventories had risen by 6.5 million barrels during the week ended September 29. The figure was significantly above market expectations of a flat reading. US crude oil inventories contracted by 2.2 million barrels in the week.

Oil prices also remained under pressure after news from Russia suggested the country is looking to lift its diesel ban soon.

The OPEC+ (Organization of the Petroleum Exporting Countries and its allies) made no changes to its oil production policy at its meeting earlier this week. Saudi Arabia and Russia remain on course to extend their voluntary supply cuts till yearend.

Meanwhile, Saudi Arabia increased its official selling prices to Asia for the fifth straight month.

Natural gas futures surged on Thursday, after the EIA said that US natural gas supplies had climbed by 86 billion cubic feet in the week ended September 29, compared to estimates of an increase of 91 billion cubic feet.

WTI crude oil for November delivery declined by $1.91, or 2.3%, to close at $82.31 per barrel on the NYMEX (New York Mercantile Exchange) on Thursday, recording the lowest finish since August 30.

December Brent crude fell $1.74, or 2%, to settle at $84.07 per barrel on ICE Futures Europe, the lowest since August 24. Both US and Brent crude had declined by around 5.6% in the prior session.

In other energy trading, November gasoline declined by 0.4% to $2.19 a gallon and November heating oil fell 4.9% to $2.87 a gallon, while November natural gas rose 6.9% to $3.17 per million British thermal units on Thursday.

What to watch: Investors will watch the data release for Baker Hughes crude oil rigs today. Crude oil rigs in the US had declined to 502 in the week ended September 29, compared to 507 in the prior week. The release of the much-awaited NFP data from the US will also remain in focus.

The markets today

Shares of Levi Strauss & Co. will be in focus today after the company released its third-quarter results

Context: Shares of Levi Strauss fell in after-hours trading on Thursday, despite the company reporting better-than-expected quarterly earnings.

Details: With consumer budgets taking a hit from elevated inflation and borrowing costs, retailers like Levi Strauss have been witnessing lower demand for apparel.

The company slashed its annual projections for the second time after reporting downbeat sales for the third quarter, citing lower demand at its North America wholesale business.

Levi Strauss said its adjusted gross margins had narrowed by 130 basis points to 55.6% in the latest quarter.

The company posted quarterly earnings of 28 cents per share, topping the consensus estimates of 27 cents. This, however, represented a 30% decline from the year-ago quarter. Sales fell 0.40% year-over-year to $1.51 billion, missing the Wall Street expectations of $1.54 billion.

“In the third quarter, we delivered double-digit growth in our direct-to-consumer business, driven by strong comp-store gains, which helped offset continued softness in the wholesale channel, primarily in the U.S.,” CEO Chip Bergh said during the earnings call.

Management said they expected the fiscal 2023 adjusted diluted EPS to be at the low-end of the earlier issued range of $1.10 to $1.20. They also lowered their net revenue guidance for the year, from 1.5%-2.5% growth to flat to up 1%.

Shares of Levi Strauss fell 1.2% to $13.05 in the extended trading session on Thursday, following the release of quarterly results. The stock has lost around 15% year to date.

What to watch: Investors will watch the overall inflation levels in the US as well as stiffening competition from local brands. Markets also await rival Puma’s results, scheduled for October 24.

Other Markets: European indices closed mostly higher on Thursday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 0.53%, 0.02% and 0.28%, respectively, and the DAX 40 down by 0.20%.

The news shaping the markets

A Russian missile struck a village near the eastern Ukrainian city of Kupiansk on Thursday, making it one of the most devastating attacks in the ongoing war. The news sent the safe-haven US dollar index higher this morning.


The Philippines said its manufacturing production had surged 9.1% year-over-year in August, up from a 4.9% increase in the prior month, which lent support to the PHP/USD forex pair.


Australia’s retail sales rose by 0.2% in August. Although this was in-line with expectations, the news sent the AUD/USD pair higher in forex trading this morning.


Japan’s average cash earnings rose by 1.1% year-over-year in August and lent support to the JPY/USD forex pair.


Argentina’s central bank maintained its key Leliq interest rate at 118% at its latest meeting. Despite this, the ARS/USD pair rose slightly in forex trading this morning.

What else to watch today

Germany’s factory orders, South Africa’s foreign exchange reserves, UK’s Halifax house price index, France’s balance of trade, current account, foreign exchange reserves and new passenger car registrations, Italy’s retail trade, Singapore’s foreign exchange reserves, Russia’s total vehicle sales and foreign exchange reserves, India’s bank loan growth, value of deposits and foreign exchange reserves, Mexico’s auto exports, Canada’s unemployment rate, employment change and average hourly earnings, Brazil’s car production and car registrations, Turkey’s treasury cash balance, as well as US Manheim used vehicle value index, total vehicle sales and consumer credit.


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