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What’s happening: Crude oil prices settled higher on Wednesday, as investors monitored the latest supply data.
What happened: Rising global geopolitical tensions led to supply concerns, providing a boost to oil prices.
A fifth straight week of decline in US crude supplies also resulted in oil prices snapping a three-session decline.
Why it matters: Rising geopolitical concerns fuelled concerns around the stability of global oil supplies, lending support to oil prices on Wednesday.
The Energy Information Administration (EIA) announced on Wednesday that US commercial crude inventories had fallen by 3.4 million barrels in the week ended July 26. This marked the fifth consecutive week of the EIA reporting declines in US crude stockpiles.
Late Tuesday, the American Petroleum Institute (API) said crude inventories had contracted by 4.5 million barrels last week.
The EIA report also showed gasoline supplies falling by 3.7 million barrels last week. Distillate stockpiles rose by 1.5 million barrels, versus expectations of a contraction of 1.6 million barrels.
US oil production came in unchanged at 13.3 million barrels per day in the latest week, while the demand for gasoline fell to 9.25 million barrels per day, versus 9.456 million barrels per day in the prior week.
Some weakness in the US dollar also lent support to oil prices, as a lower greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell more than 0.3% to 104.10 on Wednesday.
WTI crude for September delivery gained $3.18, or 4.3%, to close at $77.91 per barrel on the NYMEX (New York Mercantile Exchange) on Wednesday, but fell around 4.5% last month.
Brent crude surged $2.09, or 2.7%, to settle at $80.72 per barrel on ICE Futures Europe, notching the biggest daily percentage rise since February 8. However, prices of the global benchmark recorded a monthly loss of 6.6%. October Brent gained around 3.6% to close at $80.84 per barrel on Wednesday.
In other energy trading, August gasoline climbed 4% to $2.48 a gallon, but still exited the month down 1.9%. August heating oil added 3.4% to $2.42 a gallon, recording a monthly loss of 4%. Natural gas for September delivery fell 4.2% to close at $2.04 per million British thermal units, recording a monthly loss of 21.7%.
What to watch: Investors await the release of data on natural gas supplies from the EIA today. Analysts expect US natural gas supplies to increase 33 billion cubic feet in the week, compared to a gain of 22 billion cubic feet during the week ending July 19.
Rising geopolitical concerns and movements in the US dollar will also remain in focus.
Context: Shares of Meta Platforms surged in the extended trading session on Wednesday, after the company reported better-than-expected results for the second quarter.
Details: Meta Platforms reported a sales and earnings beat for the sixth consecutive quarter.
The Facebook and Instagram parent said its quarterly revenues grew by 22.1% year-over-year to $39.07 billion, beating consensus estimates of $38.31 billion. The company reported adjusted earnings of $5.16 per share, topping Wall Street expectations of $4.73 per share.
Family daily active people rose 7% year-over-year to 3.27 billion in the quarter, while ad impressions and average price per ad surged 10% each.
Meta Platforms has been making huge investments in datacentres to capitalise on the AI boom. Due to this, its costs and expenses rose 7% year-over-year to $24.22 billion, while capital expenditures came in at $8.47 billion.
“Meta AI is on track to be the most used AI assistant in the world by the end of the year,” CEO Mark Zuckerberg said during the earnings call. He added, “We’ve released the first frontier-level open source AI model, we continue to see good traction with our Ray-Ban Meta AI glasses, and we’re driving good growth across our apps.”
Management guided to revenue of $38.5 billion to $41 billion for the third quarter. They projected full-year total expenses of $96 billion to $99 billion and capex of $37 billion to $40 billion, compared to the earlier forecast of $35 billion to $40 billion.
How shares responded: Shares of Meta Platforms jumped 7.2% to $508.87 in after-hours trading, following the release of quarterly results. The stock has jumped around 22% over the past six months.
What to watch: Investors will continue focusing on the rising adoption of AI, which is expected to significantly impact the company’s overall results ahead.
Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 1.13%, 0.53%, 0.76% and 0.80%, respectively.
Russian President Vladimir Putin raised upfront payments by 2X for volunteers in the war against Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.
China’s Caixin general manufacturing PMI fell to 49.8 in July, versus 51.8 in the previous month. The latest reading falling short of market estimates of 51.5 exerted pressure on the CNY/USD forex pair.
Australia’s Judo Bank manufacturing PMI rose to 47.5 in July, from 47.2 in the earlier month. The region’s manufacturing sector contracting for the sixth consecutive month sent the AUD/USD pair lower in forex trading this morning.
Thailand’s S&P Global manufacturing PMI climbed to 52.8 in July, from 51.7 in June. The region’s manufacturing activity expanding for the third straight month lent support to the THB/USD forex pair.
South Korea’s S&P Global manufacturing PMI edged lower to 51.4 in July, from 52 in the prior month. Manufacturing activity expanding for the third month in a row sent the KRW/USD pair higher in forex trading this morning.
Russia’s manufacturing PMI, UK’s Nationwide house price index, manufacturing PMI and Bank of England interest rate decision, Turkey’s manufacturing PMI and gross foreign exchange reserves, Spain’s manufacturing PMI and new car sales, Italy’s manufacturing PMI, new passenger car registrations and unemployment rate, France’s manufacturing PMI, Germany’s manufacturing PMI, Eurozone’s manufacturing PMI and unemployment rate, South Africa’s manufacturing PMI, Mexico’s foreign exchange reserves, total vehicle sales and manufacturing business confidence indicator, US Challenger job cuts, initial jobless claims, nonfarm business sector labour productivity, unit labour costs, continuing jobless claims, S&P Global flash manufacturing PMI, ISM manufacturing PMI and construction spending, Canada’s manufacturing PMI, as well as Mexico’s manufacturing PMI.
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