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Crude oil gains after US inventories report

Thursday, April 04, 2024

Today’s headlines

What’s happening: Crude oil settled higher on Wednesday, following the release of crude inventories data from the US.

What happened: Crude oil had settled Tuesday’s session at its strongest level since late October 2023, amid heightened geopolitical tensions.

Oil prices extended gains on Wednesday with weakness in the US dollar providing a boost.

Why it matters: Earlier this week, oil prices had surged to their strongest level in more than five months after the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) countries agreed to extend voluntary output cuts of 2.2 million bpd (barrels per day) until the second quarter.

Attacks on Russia’s energy infrastructure by Ukraine had also sent oil prices higher.

Weakness in the US dollar as the Federal Reserve gears up to cut interest rates also drove oil prices higher. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell more than 0.5% to 104.25 on Wednesday.

Late Tuesday, the API (American Petroleum Institute) said that crude inventories in the country had declined by 2.3 million barrels for the latest week. Gasoline stockpiles fell 1.5 million barrels, while distillates contracted 2.5 million barrels.

The EIA (Energy Information Administration) reported on Wednesday that crude oil inventories in the US climbed by 3.21 million barrels in the week ended March 29, compared to projections of a contraction of 1.511 million barrels. However, crude stockpiles at the Cushing, Oklahoma, delivery hub had tumbled by 377,000 barrels last week.

Gasoline stockpiles fell by 4.256 million barrels, higher than market expectations of a decline of 0.82 million barrels, while distillate stockpiles declined by 1.268 million barrels, compared to market estimates of a contraction of 0.604 million barrels.

WTI crude for May delivery gained 28 cents to close at $85.43 per barrel on the NYMEX (New York Mercantile Exchange) on Wednesday. June Brent crude, the global benchmark, also added 43 cents to settle at $89.35 per barrel on ICE Futures Europe.

In other energy trading, May gasoline came in unchanged at $2.76 a gallon, while May heating oil climbed 2 cents to $2.73 a gallon. May natural gas settled at $1.84 per million British thermal units, down 2 cents.

What to watch: Investors await the release of data on natural gas stockpiles from the EIA today. US natural gas supplies fell by 36 billion cubic feet during the week ended March 22.

The markets today

The euro will be in focus today ahead of a basket of major economic reports

Context: The EUR/USD forex pair moved higher on Wednesday, as investors assessed the latest economic reports to get further insights into the European Central Bank’s future rate cuts.

Details: Data released on Wednesday showed the consumer price inflation rate in the Eurozone slowing to 2.4% year-over-year in March, from 2.6% in February. The figure also came in better that market estimates of 2.6%.

The core inflation rate, which excludes volatile food and energy prices, also eased to 2.9% in March. This was its lowest reading since February 2022 and came in below market expectations of 3.0%. The unemployment rate in the Eurozone reached a record low of 6.5% in February.

The ECB is scheduled to hold its meeting next week and is widely expected to keep rates unchanged. Speculations are for the central bank to cut rates at its June meeting.

Weakness in the US dollar also lent support to the EUR/USD forex pair. The US dollar index also came under pressure on Wednesday, after hitting a four-month high of 105 on April 1.

The EUR/USD gained around 0.6% to 1.0836 during Wednesday’s session. The STOXX Europe 600 Index added 0.29% to close at 510.02.

What to watch: Investors await the release of economic data on producer price inflation, services PMI and composite PMI from the Eurozone today. Producer prices, which fell by 0.9% in February, are expected to decline by 0.7% in March. The HCOB Eurozone services PMI is projected to increase to 51.1 in March, from 50.2 in the earlier month, while analysts expect composite PMI to rise to 49.9 in March, from 49.2 in February.

Other Markets: US trading indices closed mixed on Wednesday, with the S&P 500 and Nasdaq 100 up by 0.11% and 0.21%, respectively, and the Dow Jones index down by 0.11%.

The news shaping the markets

During a phone call with Ukraine’s President Volodymyr Zelenskyy, Japan’s Prime Minister Fumio Kishida committed to unwavering support. The news sent the safe-haven US dollar index slightly lower this morning.


Australia’s private house approvals surged by 10.7% to 8,404 units in February, after a 9.9% decline in January, lending support to the AUD/USD forex pair.


New Zealand’s building permits climbed by 14.9% to 2,795 units in February, reversing from an 8.8% decline a month ago, which sent the NZD/USD pair higher in forex trading this morning.


Russia’s gross domestic product expanded by 7.7% in February. This being the strongest growth since June 2021 lent support to the RUB/USD forex pair.


Brazil’s industrial production fell by 0.3% in February, compared to market expectations of a 0.3% gain, which sent the BRL/USD pair lower in forex trading this morning.

What else to watch today

South Africa’s S&P Global PMI, Spain’s services PMI and composite PMI, Italy’s services PMI and composite PMI, France’s services PMI and composite PMI, Germany’s services PMI and composite PMI, European Central Bank’s monetary policy meeting accounts, UK’s new car registrations, services PMI and composite PMI, Mexico’s foreign exchange reserves, consumer confidence indicator and monetary policy meeting minutes, Brazil’s current account, foreign direct investment, car production, new vehicle sales and balance of trade, Turkey’s gross foreign exchange reserves and balance of trade, US Challenger job cuts, balance of trade, initial jobless claims and continuing jobless claims, Canada’s balance of trade, as well as Argentina’s tax revenue.


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