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What’s happening: Crude oil prices rose on Wednesday, after recording losses earlier during the session.
What happened: US President Donald Trump announced a tariff pause on several countries, providing boost to oil prices.
Investors also responded to crude stockpiles data from the Energy Information Administration (EIA).
Why it matters: Crude oil had been under pressure due to trade war concerns and the OPEC (Organization of Petroleum Exporting Countries) announcing last week that it plans to raise its output in May, increasing oversupply concerns.
Crude prices received some support from Trump saying on Wednesday that he had agreed to a 90-day pause on several of his new tariffs, effective immediately.
However, the US President did not spare China. He increased tariffs on China’s goods from 104% to 125%, which came into effect on Wednesday, escalating the trade war between the world’s two largest economies.
China also announced plans to implement 84% tariffs on US goods, increasing concerns of a broader slowdown in demand.
Before Trump announced the pause on tariffs, the European Commission had said that it would go ahead with its countermeasures starting April 15 against levies imposes by the US on steel and aluminium.
Meanwhile, data released by the EIA on Wednesday showed that US crude inventories surged by 2.6 million barrels in the week ending April 4, much higher than market expectations of a gain of 1.4 million barrels.
On the other hand, gasoline stockpiles declined by 1.6 million barrels, versus estimates of a decline of 1.7 million barrels. Distillate stockpiles also dipped by 3.544 million barrels, compared to market expectations of a 0.2 million gain.
The 2700-mile Keystone oil pipeline from Canada to the US, which ruptured in North Dakota, remained shut on Wednesday.
WTI crude oil prices jumped $2.77, or 4.65%, to settle at $62.35 a barrel on Wednesday, after dipping more than 5% earlier during the session. Brent crude, the international benchmark, climbed $2.66, or 4.23%, to close at $65.48 a barrel, after tumbling below the $60 mark in early trading.
Oil prices are still down around 13% since the announcement of retaliatory tariffs by Trump on April 2.
What to watch: Investors await the release of economic data on natural gas stockpiles from the EIA today (1830 UAE Time). US natural gas stockpiles, which rose by 29 billion cubic feet in the week ending March 28, are expected to rise by 60 billion cubic feet in the latest week.
Investors will also focus on tariff-related announcements from the US and China.
Context: The US dollar index moved lower this morning as investors digested the latest tariff announcements from President Donald Trump.
Details: The US dollar index recovered from a six-month low of 102 recorded on April 3 after Trump announced a 90-day pause on the reciprocal tariff package for non-retaliatory countries.
However, he increased tariffs for China to 125% as Beijing imposed retaliatory tariffs in response to Trump’s initial tariff package. Although prospects of lower tariffs lent some support to the greenback this week, uncertainty around US economic growth kept the pressure on.
Rising trade concerns between the US and China weighed on the US dollar this week.
Data released on Wednesday showed US wholesale inventories grew by 0.3% to $902.3 billion in February, compared to a 0.8% gain in the previous month.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.1% to 102.81 this morning.
The EUR/USD forex pair gained around 0.2% to reach 1.0968 this morning, while the GBP/USD pair rose around 0.1% to 1.2834.
What to watch: Investors await the release of economic data on inflation rate (1630 UAE Time) and initial jobless claims (1630 UAE Time) from the US today. Analysts expect the annual inflation rate in the US to ease for a second straight month to 2.6% in March, from 2.8% in the previous month.
Initial jobless claims in the US, which fell by 6,000 to 219,000 in the week ending March 29, are expected to increase to 223,000 in the recent week.
Other Markets: European indices closed lower on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 2.92%, 3.00%, 3.34% and 3.50%, respectively.
Ukraine’s President Volodymyr Zelensky said that they had obtained passport details of at least 155 Chinese citizens fighting in the ongoing war with Russia. The news sent the RUB/USD pair higher in forex trading this morning.
China’s consumer prices declined by 0.1% year-over-year in March, compared to market estimates of a 0.1% increase, lending support to the CNY/USD forex pair.
Australia’s consumer inflation expectations rose to 4.2% in April, from 3.6% in the previous month, sending the AUD/USD pair lower in forex trading this morning.
Brazil’s value of outstanding loans grew by 0.4% to R$6.5 trillion in February, following a flat reading in the previous month, which lent support to the BRL/USD forex pair.
Mexico’s inflation rate rose to 3.80% in March, from 3.77% in February, sending the MXN/USD pair lower in forex trading this morning.
Italy’s industrial production (1200 UAE Time), South Africa’s manufacturing production (1500 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Canada’s building permits (1630 UAE Time), US continuing jobless claims (1630 UAE Time) and monthly budget statement (2000 UAE Time), as well as Mexico’s monetary policy meeting minutes (1900 UAE Time).
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