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What’s happening: Crude oil prices recorded gains on Wednesday, following the release of supply data from the US.
What happened: Official data released by the US showed an unexpected decline in crude supplies last week.
Strength in gasoline demand and reports of the OPEC+ delaying an increase in planned output also provided a boost to oil prices.
Why it matters: Data released on Wednesday showed US commercial crude supplies had declined by 500,000 barrels in the week ended October 25. This came against market expectation of a gain of 800,000 barrels. Late Tuesday, the API (American Petroleum Institute) said that crude inventories had contracted by 573,000 barrels during the week.
Gasoline supplies fell 2.7 million barrels, while distillate supplies declined by 1 million barrels last week. Experts had projected declines of 1.1 million barrels for gasoline and 1.4 million barrels for distillate supplies.
Demand for gasoline rose to 9.159 million bpd (barrels per day) in the latest week, compared to 8.838 million bpd in the previous week.
US gasoline stockpiles contracted last week to a two-year low on elevated demand, the EIA said. US imports of crude oil from Saudi Arabia dipped to their weakest level since January 2021, at 13,000 bpd last week, from 150,000 barrels per day in the previous week. Crude imports from Canada, Colombia, Iraq, Brazil also fell on the week.
The OPEC+ is scheduled to increase output by 180,000 bpd (barrels per day) in December. The group has reduced output by 5.86 million bpd, representing around 6% of global demand. The OPEC+ will be meeting on December 1 to announce its upcoming policy moves. Markets widely expect the group to postpone the increase.
Brent crude futures gained $1.43, or 2.01%, to close at $72.55 per barrel on Wednesday. US WTI crude futures surged $1.4, or 2.08%, to settle at $68.61 per barrel. Brent crude prices are down more than 6% this week, amid an easing of geopolitical tensions.
In other energy trading, November gasoline settled at $1.9590 a gallon, while November heating oil surged to $2.1985 on Wednesday. Natural gas for December delivery fell to $2.845 per million British thermal units during the session.
What to watch: Investors will continue watching the OPEC+ to get some insights into the group’s upcoming policy decision.
Data on natural gas supplies will be released on Thursday. US natural gas supplies, which increased by 80 billion cubic feet during the week ended October 18, are expected to rise by 79 billion cubic feet in the latest week.
Context: The CAD/USD forex pair slipped this morning, as investors assessed the Bank of Canada’s monetary policy outlook.
Details: The Bank of Canada has lowered its benchmark interest rate by 125 basis points (bps) to 3.75% since June this year, including the rate cut of 50 bps announced last week. Markets widely project the central bank to lower rates by another 100 bps by September next year.
Strength in the US dollar exerted pressure on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.2% to 104.17 this morning.
However, higher prices of crude oil, one of Canada’s major exports, limited the overall losses for the loonie. WTI crude oil futures gained 0.5% to trade at $68.95 per barrel this morning.
The CAD/USD forex pair fell around 0.1% to 1.3920 this morning. The S&P/TSX Composite Index fell 0.22% to close at 24,507.79 on Wednesday.
What to watch: Investors await the release of economic data on average weekly earnings, GDP and CFIB’s business barometer from Canada today. Canada’s GDP is projected to remain flat in August, compared to 0.2% growth in July.
Average weekly earnings of non-farm payroll employees in Canada, which rose by 4.5% year-over-year to $1,267.5 in July, are expected to rise by 4.4% in August. Analysts expect the CFIB’s Business Barometer for Canada to decline further to 54.3 in October, from 55 in September.
Other Markets: US trading indices closed lower on Wednesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.22%, 0.33% and 0.79%, respectively.
The secretary of Ukraine’s national security council, Oleksandr Lytvynenko, said that another 160,000 people will be joining the military to serve in its war with Russia. The news sent the RUB/USD pair lower in forex trading this morning.
China’s official NBS non-manufacturing PMI rose to 50.2 in September, from 50.0 in the previous month. However, the figure came in short of market expectations of 50.4, exerting pressure on the CNY/USD forex pair.
Australia’s retail sales grew by 0.1% in September, missing market estimates of 0.3%, which sent the AUD/USD pair lower in forex trading this morning.
New Zealand’s ANZ Business Outlook Index rose to 65.7 in October, from 60.9 in the previous month. Business mood in the country climbing to its highest level since March 2014 lent support to the NZD/USD forex pair.
Japan’s retail sales rose by 0.5% year-over-year in September, down from the 3.1% surge recorded in the previous month. The latest reading also came in short of market expectations of 2.3%, which sent JPY/USD pair lower in forex trading this morning.
Germany’s retail sales and import prices, Turkey’s balance of trade, tourism revenues, tourist arrivals and gross foreign exchange reserves, France’s inflation rate and producer prices, Spain’s tourist arrivals, Italy’s unemployment rate, industrial sales and inflation rate, Spain’s current account, South Africa’s producer price inflation, Eurozone’s inflation rate and unemployment rate, Brazil’s gross debt to GDP, unemployment rate and government budget value, US Challenger job cuts, personal income, personal spending, employment cost index, initial jobless claims, PCE price index, continuing jobless claims and Chicago business barometer, South Africa’s balance of trade, as well as Saudi Arabia’s GDP growth rate.
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