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What’s happening: Crude oil futures moved lower on Monday as investors monitored ongoing geo-political unrest.
What happened: Crude prices has risen sharply last week on concerns around supply.
Oil retreated on Monday as investors digested reports of the US reaching an agreement with Venezuela to ease sanctions provided a date for the Presidential election is set.
Why it matters: Both crude oil benchmarks recorded sharp gains on Friday, rising around 6% during the session. Brent crude added 7.5% last week, while WTI crude rose by 5.9%.
The governments of US and Venezuela are reportedly on course to signing a pact in Barbados. In case the sanctions on Venezuela’s oil industry are eased, there would be an increase in global oil supply.
Saudi Arabia said its crude exports had fallen to 28-month lows in August amid a continuous reduction in production to stabilise the markets. Oil exports from the world’s biggest crude oil exporter declined to 5.58 million bpd (barrels per day) for August, compared to 6.01 million bpd in July.
The US dollar moved lower, limiting the overall downside in oil, as a decline in the greenback makes commodities and oil cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.4% to 106.24 on Monday.
WTI crude oil for November delivery declined $1.03 to $86.66 per barrel, while Brent crude for December delivery lost $1.24 to $89.65 per barrel on Monday.
In other energy trading, wholesale gasoline for November delivery came in flat at $2.27 a gallon, while November heating oil declined 6 cents to $3.15 a gallon and November natural gas slipped 13 cents to $3.11 per 1,000 cubic feet.
What to watch: Investors await the release of API’s (American Petroleum Institute) data on crude oil stockpiles. US inventories of crude oil had risen by 12.94 million barrels in the week ended October 6, compared to a decline of 4.21 million barrels a week ago. Investors will also watch the EIA’s (Energy Information Administration) data on oil stockpiles, due to be released on Wednesday.
Context: US stock markets recorded sharp gains on Monday, shrugging off an increase in Treasury yields.
Details: Big banks, including JPMorgan Chase, Wells Fargo and Citigroup, reported upbeat quarterly earnings on Friday, following by strong earnings from Charles Schwab.
Several big companies, including Bank of America, Tesla and Netflix, are set to report earnings results this week.
The 10-year US Treasury yield rose to 4.698% on Monday, while oil prices fell at the start of the week.
All major sectors on the S&P 500 closed in the positive zone on Monday, with the consumer discretionary vertical recording the strongest performance.
The S&P 500 rose 0.5% last week to record its second straight week of gains, while the Dow Jones index added 0.8%.
The Dow Jones index gained 314.25 points, or 0.93%, to close at 33,984.54 on Monday, while the S&P 500 added 1.06% to 4,373.63 and the Nasdaq 100 rose by 1.18% to settle at 15,172.73.
What to watch: Investors await the release of data on retail sales, industrial production, business inventories and housing market index from the US today. Retail sales in the US, which rose 0.6% in August, are expected to grow by 0.3% in September.
Analysts expect industrial production to rise 0.2% in September following a 0.4% increase in August. Total business inventories, which were flat month-over-month in July, are expected to rise by 0.2% in August. Analysts expect the NAHB/Wells Fargo Housing Market Index to improve to 47 in October, from 45 in September.
Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.41%, 0.34%, 0.27% and 0.23%, respectively.
US Treasury Secretary Janet Yellen reaffirmed support for Ukraine and said it remained a “top priority” for the country. The news sent the safe-haven US dollar index higher this morning.
Singapore’s non-oil domestic exports declined by 13.2% year-over-year in September. This being the 12th straight month of contraction exerted pressure on the SGD/USD forex pair.
New Zealand’s annual inflation rate eased to 5.6% in the third quarter, from 6% in the prior quarter, which sent the NZD/USD pair lower in forex trading this morning.
South Korea’s export prices fell 8.9% year-over-year in September, following a 7.9% decline in the previous month. This being the ninth consecutive month of decline exerted pressure on the KRW/USD forex pair.
Canada’s manufacturing sales grew 0.7% in August, coming in below a preliminary reading of a 1% increase and worse than the 1.6% recorded for the prior month, which sent the CAD/USD pair lower in forex trading this morning.
UK’s unemployment rate, Average weekly earnings, employment change, claimant count change, Eurozone’s ZEW indicator of economic sentiment, Germany’s ZEW indicator of economic sentiment and ZEW current conditions, Canada’s housing starts, inflation rate, foreign investment in securities and new motor vehicle sales, US capacity utilization and manufacturing production, India’s total passenger vehicles sales, Turkey’s total motor vehicles production, as well as Brazil’s industrial entrepreneur confidence index.
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