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What’s happening: Crude oil prices recorded gains on Thursday, recovering from their weakest level in over six weeks.
What happened: Oil prices remained under pressure in early trading on Thursday, with market sentiment being impacted by a steep decline in US stocks in the previous session.
The People’s Bank of China also announced an unexpected cut in interest rates.
Why it matters: Oil prices fell in early trading on Thursday amid an overall decline in market sentiment, after US stocks recorded their worst downturn since 2022 on Wednesday.
China’s central bank announced a surprise rate cut on its medium-term lending facility from 2.5% to 2.3%. The latest move came after the bank cut its seven-day reverse-repo rate on Monday.
Crude oil prices recovered after hitting six-week lows during Wednesday’s session, following data from the Energy Information Administration. The EIA said that US crude oil inventories had contracted by 3.741 million barrels during the week ended July 19, higher than market estimates of a decline of 2.05 million barrels. This also marked the fourth straight week of contraction in crude stockpiles.
Upbeat economic data from the US also provided a boost to oil prices on Thursday. The US economy expanded at an annualised rate of 2.8%, surpassing expectations of 2.1%. Upbeat economic activity in the world’s top oil consumer fuelled speculations of a rise in demand for crude.
Natural gas prices remained under pressure on Thursday after the EIA said that US supplies rose by 22 billion cubic feet in the week ended July 19, much higher than market expectations of a gain of 19 billion cubic feet.
WTI crude for September delivery added 69 cents, or 0.9%, to close at $78.28 per barrel on the NYMEX (New York Mercantile Exchange), after hitting a low of $76.04 per barrel, the weakest level since June 10.
September Brent crude, the global benchmark, gained 66 cents, or 0.8%, to settle at $82.37 per barrel on ICE Futures Europe. Meanwhile, October Brent crude climbed 0.7% to $81.39 per barrel during the session.
In other energy trading, August gasoline gained 0.7% to $2.47 a gallon, while August heating oil added 0.8% to $2.47 a gallon and natural gas for August delivery declined 3.6% to close at $2.04 per million British thermal units.
What to watch: Investors await the release of the PCE price index from the US today, which is expected to significantly impact broader market sentiment. The core PCE inflation gauge for the US economy, which eased to 2.6% in May, is expected to decline further to 2.5% in June. Data on Baker Hughes crude oil rigs will also be released today.
The US dollar will remain in focus, as movements in the greenback impact the demand for crude oil.
Context: European equity markets settled lower on Thursday, as investors assessed the latest corporate earnings.
Details: Wall Street recorded sharp losses on Wednesday, with the Nasdaq 100 shedding more than 700 points during the session. This impacted risk sentiment and exerted pressure on European stocks on Thursday.
Investors also monitored earnings reports from Europe during the session. Unilever’s stock gained around 6%, after the consumer goods company reported sales of €31.12 billion for the first half of the year, up 2.3% year-over-year. The company also upgraded its margin forecast for the full year.
However, shares of Stellantis tanked more than 8%, after the company posted a 48% decline in net profits for the first half. Kering’s stock declined to a seven-year low following the company announcing a sharp revenue contraction.
The STOXX Europe 600 Index fell 0.72% to close at 508.63 on Thursday, extending losses from the previous session. Tech stocks were among the worst performers, dipping around 2.75% during the session. The Eurozone’s Stoxx 50 declined 1.04% to settle at 4,811.28, the weakest level since February.
Germany’s DAX 40 fell 0.48% to 18,298.72, while France’s CAC 40 lost 1.15% to settle at 7,427.02 on Thursday.
London’s FTSE 100 bucked the overall market trend, gaining 0.4% to close at 8,186.35.
What to watch: Investors await economic data on Eurozone’s inflation expectations over the next 12 months. Analysts expect Eurozone’s median expectations for inflation to decline to 2.7% in June, from 2.8% in May.
Other Markets: US trading indices closed mixed on Thursday, with the S&P 500 and Nasdaq 100 down by 0.51% and 1.06%, respectively, and the Dow Jones index up by 0.20%.
Fitch slashed Ukraine’s credit rating into default territory, taking it to “C”. The news sent the RUB/USD pair higher in forex trading this morning.
The Monetary Authority of Singapore kept its interest rates unchanged at its latest meeting, lending support to the SGD/USD forex pair.
New Zealand’s ANZ Roy Morgan Consumer Confidence Index rose to 87.9 points in July, from 83.2 in the prior month. The latest reading being the strongest since February sent the NZD/USD pair higher in forex trading this morning.
The core consumer price index for Japan’s Ku-area of Tokyo accelerated to 2.2% year-over-year in July, the highest level since March. The reading came in-line with market estimates and lent support to the JPY/USD forex pair.
Ireland’s Credit Union Consumer Sentiment Index rose to 74.9 in July, from June’s reading of 70.5. The region’s consumer confidence surging to the strongest level since January 2022 sent the EUR/USD pair higher in forex trading this morning.
France’s consumer confidence indicator, Spain’s unemployment rate and retail sales, Italy’s manufacturing confidence index and consumer confidence index, Bank of Russia’s interest rate decision, Canada’s CFIB business barometer, wholesale sales and government budget value, Brazil’s value of outstanding loans, nonfarm payrolls and government revenues, India’s value of loans, deposit growth and foreign exchange reserves, Mexico balance of trade, US personal income, personal spending and University of Michigan consumer sentiment, Indonesia’s foreign direct investment, as well as China’s foreign direct investment.
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