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What’s happening: Crude oil settled higher on Wednesday, rebounding from a sharp decline earlier in the week.
What happened: Oil prices had declined by 13% over the past two sessions on news of a ceasefire agreement between Iran and Israel.
Data released by the US signalled relatively strong demand for crude, lending support to oil prices on Wednesday.
Why it matters: Oil prices had climbed sharply after June 13 following a surprise attack by Israel on major military and nuclear facilities of Iran. Crude prices surged to a five-month high after the US attacked Iran’s nuclear facilities.
On Tuesday, Brent crude closed at its weakest level since June 10, while WTI settled at its lowest mark since June 5 following the announcement of a ceasefire between Israel and Iran, which eased concerns over oil supply from the Middle East.
Oil prices received some support on Wednesday from data showing a decline in US crude, gasoline and distillate inventories.
The US Energy Information Administration (EIA) said crude oil inventories contracted by 5.836 million barrels in the week ended June 20, much higher than market estimates of a decline of 0.75 million barrels. Meanwhile, stockpiles in the Cushing, Oklahoma, delivery hub declined by 464,000 barrels last week. Gasoline stocks fell by 2.075 million barrels, while distillate fuel inventories dipped by 4.066 million barrels during the latest week.
Recent economic reports signalled downbeat economic growth in the US, which increased the prospects of an interest rate cut by the Federal Reserve this year. Markets expect the US central bank to lower rates by September, which would provide a boost to economic growth and raise oil demand.
Brent crude futures gained 54 cents, or 0.8%, to close at $67.68 a barrel on Wednesday, while WTI crude oil climbed 55 cents, or 0.9%, to settle at $64.92 a barrel.
What to watch: Investors await the release of economic data on natural gas stockpiles (1830 UAE Time) from the EIA today. US natural gas inventories, which rose by 95 billion cubic feet to 2.802 trillion cubic feet in the week ending June 13, are expected to rise by 88 billion cubic feet in the latest week.
Context: The CAD/USD forex pair rose this morning amid weakness in the US dollar.
Details: Canada’s headline CPI remained at 1.7% year-over-year in May, coming in below the Bank of Canada’s 2% target for the second month in a row, while the central bank’s trimmed-mean inflation gauge stood at 3%, which forced markets to dial back speculations of interest rate cuts.
Progress in trade talks between Canada and the US provided support to cross-border capital flows, boosting the Canadian dollar.
A rise in the price of crude oil, one of Canada’s major exports, also provided a boost to the loonie this morning. WTI crude oil prices gained around 0.4% to $65.20 a barrel on Thursday.
Weakness in the US dollar lent further support to the CAD/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 97.58.
The CAD/USD forex pair gained around 0.1% to 1.3712 this morning. The S&P/TSX Composite Index had declined by 0.57% to close at 26,566.32 on Wednesday.
What to watch: Investors await the release of economic data on Canada’s average weekly earnings (1630 UAE Time) and wholesale sales (1630 UAE Time) today. Average weekly earnings of non-agricultural workers in Canada, which grew by 4.3% year-over-year in March, are expected to rise by 4.2% year-over-year in April. Wholesale sales in Canada, which declined 2.3% to C$84 billion in April, are expected to contract by 0.5% in May.
Other Markets: Asian trading indices traded mixed this morning, with Hong Kong’s Hang Seng Index and China’s Shanghai Composite Index down by 0.64% and 0.10%, respectively, and the Japan’s Nikkei 225 up by 1%.
US President Donald Trump said he is looking to provide further Patriot missiles to Ukraine to defend against Russia’s rising strikes. The news sent the RUB/USD pair slightly lower in forex trading this morning.
Ireland’s Credit Union Consumer Sentiment Index climbed to 62.5 in June, hitting a three-month high and lending support to the EUR/USD forex pair.
South Korea’s Business Survey Index for the manufacturing sector declined to 70 in June, from a 10-month high of 73 in the previous month, which sent the KRW/USD pair lower in forex trading this morning.
Argentina recorded a current account deficit of $5.19 billion in the first quarter versus a year-ago surplus of $0.176 billion, which exerted slight pressure on the ARS/USD forex pair.
Colombia’s industrial confidence index rose to 6.1 in May, from -0.3 in the previous month. The region’s industrial confidence surging to its strongest level since September 2022 sent the COP/USD pair higher in forex trading this morning.
South Africa’s consumer confidence (1200 UAE Time) and PPI (1330 UAE Time), Italy’s 6-month BOT auction (1310 UAE Time), UK’s CBI distributive trades (1400 UAE Time) and 2046 Treasury Gilt auction (1400 UAE Time), Brazil’s central bank monetary policy report (1500 UAE Time) and IPCA mid-month CPI (1600 UAE Time), Turkey’s MPC meeting summary (1500 UAE Time) and foreign exchange reserves (1530 UAE Time), India’s M3 money supply (1530 UAE Time), Mexico’s balance of trade (1600 UAE Time) and interest rate decision (2300 UAE Time), Canada’s 2-year Bond auction (2000 UAE Time), US durable goods orders (1630 UAE Time), GDP growth rate (1630 UAE Time), Chicago Fed National Activity index (1630 UAE Time), corporate profits (1630 UAE Time), goods trade balance (1630 UAE Time), initial jobless claims (1630 UAE Time), retail inventories (1630 UAE Time), wholesale inventories (1630 UAE Time), continuing jobless claims (1630 UAE Time), core PCE prices (1630 UAE Time), real consumer spending (1630 UAE Time), pending home sales (1800 UAE Time), Kansas Fed composite index (1900 UAE Time), Kansas Fed manufacturing index (1900 UAE Time), 4-week Bill auction (1930 UAE Time), 8-week Bill auction (1930 UAE Time), 15-year mortgage rate (2000 UAE Time), 30-year mortgage rate (2000 UAE Time) and 7-year Note auction (2100 UAE Time), as well as Russia’s corporate profits (2000 UAE Time).
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