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Crude oil reverses trend on US data

Thursday, June 13, 2024

Today’s headlines

What’s happening: Crude oil prices settled higher on Wednesday as investors assessed inflation and inventories data from the US.

What happened: Cooler-than-expected consumer prices for May resulted in oil prices hitting session highs.

Oil prices pared gains, however, after the US reported a surprise rise in crude and gasoline inventories.

Why it matters: Oil prices surged to session highs earlier in the session as a lighter-than-projected reading for US consumer prices fuelled speculations around the Federal Reserve’s rate cut decision.

The annual inflation rate in the US eased to 3.3% in May, recording the lowest level in three months, versus April’s reading of 3.4%. The figure was also lower than market expectations of 3.4%.

Oil prices were also supported by the OPEC (Organization of the Petroleum Exporting Countries) keeping its global demand growth forecast for 2024 and 2025 unchanged at 2.2 million barrels per day and 1.8 million barrels per day, respectively.

Crude oil prices pulled back from session highs after the EIA (Energy Information Administration) said that US inventories increased by 3.7 million barrels in the week ended June 7. This came as a surprise, with market estimates calling for a decline of 900,000 barrels.

Data also showed gasoline stockpiles grew by 2.6 million barrels, while distillate stockpiles rose by 900,000 barrels last week. While distillates were expected to rise by only 400,000 barrels, gasoline stockpiles were projected to contact 500,000 barrels.

The IEA (International Energy Agency) slashing its global oil demand growth outlook by approximately 100,000 barrels to 960,000 barrels a day for 2024 also exerted pressure on oil prices later in the session.

WTI crude oil for July delivery gained 60 cents, or 0.8%, to close at $78.50 a barrel on the NYMEX (New York Mercantile Exchange) on Wednesday, after surging as high as $79.32 earlier in the session. August Brent crude climbed 68 cents, or 0.8%, to close at $82.60 a barrel on ICE Futures Europe.

In other energy trading, July gasoline declined by 0.6% to $2.394 a gallon, while July heating oil added 0.8% to settle at $2.441 a gallon. July natural gas shed 2.7% to reach $3.045 per million British thermal units, after closing at a five-month high during the prior session on projections of higher-than-average temperatures across most of the US.

What to watch: Investors await the release of economic data on natural gas stockpiles from the EIA today. US natural gas inventories, which increased by 98 billion cubic feet during the week ended May 31, are expected to rise by 75 billion cubic feet in the latest week.

Data on producer prices from the US will also remain in focus, which is expected to provide direction to oil prices ahead.

The markets today

European stocks will be in focus ahead of industrial production data from the Eurozone

Context: European stocks settled higher on Wednesday, as investors assessed the latest economic reports from the region.

Details: Data from the UK showed that the country’s economic growth came in flat for April, with construction output contracting for the third month in a row. The monthly GDP reading came in-line with estimates but marked a decline from the 0.4% growth recorded in March. UK’s industrial production contracted by 0.9% in April, while trade deficit widened to £6.75 billion.

Germany’s consumer price inflation accelerated to 2.4% in May, from a three-year low of 2.2% recorded in the previous month.

Data out of the US showed the consumer price index coming in flat in May, versus market estimates of a 0.1% gain. This also marked a deceleration from the previous month’s 0.3% growth.

The STOXX Europe 600 Index gained 1.08% to close at 522.89 on Wednesday. Tech stocks were among the top performers, gaining around 2.4% during the session.

London’s FTSE 100 rose 0.83% to settle at 8,215.48. while Germany’s DAX 40 and France’s CAC 40 added 1.42% and 0.97%, respectively.

What to watch: Investors await the release of economic data on industrial production from the Eurozone today. Industrial production in the bloc, which grew by 0.6% in March, is expected to rise by 0.2% in April.

Other Markets: US trading indices closed mixed on Wednesday, with the S&P 500 and Nasdaq 100 up by 0.85% and 1.33%, respectively, and the Dow Jones index down by 0.09%.

The news shaping the markets

The US announced lifting a ban to send weapons and training to Ukraine’s controversial Azov brigade. The news sent the safe-haven US dollar index higher in forex trading this morning.


Japan’s business survey index of large manufacturing firms fell by 1.0% in the second quarter, versus a 6.7% decline in the earlier period, exerting pressure on the JPY/USD forex pair.


UK’s RICS Residential Market Survey showed a decline in house price balance to -17 in May, compared to April’s reading of -7. The region’s house price balance falling to its lowest level since January sent the GBP/USD pair lower in forex trading this morning.


New Zealand’s electronic card transactions fell by 1.1% to NZ$6449 million in May, which exerted pressure on the NZD/USD forex pair.


The US government reported a budget deficit widened to $347 billion in May, from the year-ago gap of $240 billion, which sent the Dow Jones index lower by around 0.1% on Wednesday.

What else to watch today

Germany’s wholesale prices, Spain’s Consumer Price Index, South Africa’s gold production and mining production, Turkey’s gross foreign exchange reserves, Brazil’s retail sales, US initial jobless claims and continuing jobless claims, Russia’s balance of trade, China’s vehicle sales, new yuan loans, money supply M2, value of outstanding loans and total social financing, as well as Argentina’s inflation rate.


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