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What’s happening: Crude oil settled higher on Friday, recording gains for another week.
What happened: Supply cuts announced by the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) earlier this month lent support to oil prices last week.
Hope of a recovery in energy demand also set both oil benchmarks on course to recording double digit percentage gains in July.
Why it matters: Energy traders turned bullish on better demand prospects on Thursday after the US reported GDP growth at a faster-than-expected 2.4% in the second quarter.
Rising prospects of the US Federal Reserve and European Central Bank nearing the end of their rate-hiking cycle also provided a boost to global economic growth and energy demand.
China’s policymakers have pledged further stimulus measures to accelerate the economic rebound, after the country’s economy expanded at a weaker-than-expected pace in the second quarter. The world’s second-largest economy grew by 6.3% in the quarter. Although this was higher than the 4.5% growth recorded in the first quarter, it came in below market expectations of 7% growth.
Data released from some top Eurozone economies on Friday also lent support to oil prices. France’s GDP grew at a faster-than-expected 0.5% in the second quarter, while Spain’s economy expanded 0.4%.
Both oil benchmarks declined by as much as $1 in early trading on Friday but reversed their losses as the session progressed. Brent crude gained 75 cents to reach $84.99 a barrel, while US WTI crude added 49 cents to $80.58 a barrel.
Both oil benchmarks added around 5% last week, recording gains for the fifth week in a row, with voluntary production cuts by Saudi Arabia and Russia expected to tighten supply in the second half of this year.
Oil is now on track to recording a monthly gain of over 13%.
In other energy trading, wholesale gasoline for August delivery added 1 cent to $2.96 a gallon, while August heating oil gained 4 cents to $2.96 a gallon and September natural gas rose by 4 cents to $2.64 per 1,000 cubic feet on Friday.
What to watch: Traders will watch comments from central bank officials regarding their respective monetary policies. Markets will also monitor global economic growth.
Markets await announcements from the OPEC+ regarding further output cuts in the months ahead. The US EIA’s (Energy Information Administration) data on crude oil stockpiles, scheduled for release on Wednesday, will remain in focus.
Context: European markets settled mixed on Friday, as investors digested several earnings reports and central bank decisions last week.
Details: On Thursday, the European Central Bank raised interest rates by 25 basis points, as was widely expected. The US Federal Reserve also announced a hike of 25 bps last week, while Bank of Japan kept its benchmark short-term interest rate at -0.1% on Friday.
Eurozone’s major economies released several reports on Friday. Germany’s economy stalled during the second quarter, while markets were expecting 0.1% growth. Spain’s economy expanded by 0.4%, while France’s GDP grew by 0.5%. Also, France’s consumer price inflation eased to 4.3% year-over-year in July, from 4.5% a month ago.
Meanwhile, AstraZeneca’s shares rose steeply after the company reported upbeat sales and profits. Sanofi’s stock declined by around 2.9% after the French drugmaker announced disappointing sales.
The STOXX Europe 600 Index fell 0.2% to close at 470.78 on Friday, after settling at its strongest level in around 1.5 years on Thursday. Most sectors settled in the negative zone. Media stocks were among the worst performers, falling about 1.3% during Friday’s session.
Despite closing in the red on Friday, the benchmark European index recorded gains for the third week in a row, with tech stocks and miners leading the list.
London’s FTSE 100 rose 0.02% to 7,694.27, while Germany’s DAX 40 and France’s CAC 40 added 0.39% and 0.15%, respectively, on Friday.
What are expectations: Investors will watch Eurozone’s GDP growth and inflation rate announcements today. The Eurozone economy, which stalled in the first quarter, is expected to expand by 0.3% in the second quarter. Analysts expect consumer price inflation to ease to 5.2% in July, from 5.5% in the previous month.
Other Markets: US trading closed higher on Friday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 0.50%, 0.99% and 1.85%, respectively.
Russia brought down three of Ukraine’s drones hovering over Moscow. The news sent the safe-haven US dollar index higher this morning.
Singapore bank loans rose to SG$799.3 billion in June, from SG$798.8 billion in the prior month, lending support to the SGD/USD forex pair.
China’s official NBS non-manufacturing PMI fell to 51.5 in July, from 53.2 in the prior month, which sent the CNY/USD pair lower in forex trading this morning.
Australia’s private sector credit rose by 0.2% in June, lending support to the AUD/USD forex pair.
Japan’s industrial production rose by 2.0% in June, below market expectations of 2.4% growth, which sent the JPY/USD pair lower in forex trading this morning.
Germany retail sales and import prices, Saudi Arabia’s gross domestic product, money supply M3 and value of loans, South Africa’s money supply M3, private sector credit and balance of trade, Turkey’s tourism revenues and tourist arrivals, Italy’s GDP growth rate, Spain’s current account, UK’s mortgage lending, consumer credit and mortgage approvals, Italy’s inflation rate, India’s infrastructure output and central government budget value, Mexico’s GDP growth rate, US Chicago business barometer and Dallas Fed manufacturing index, Russia’s money supply M2 and monetary policy report, Central Bank of Brazil’s focus market readout, as well as Australia’s CoreLogic home value index.
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