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Crude oil spikes on US inventories data

Thursday, May 09, 2024

Today’s headlines

What’s happening: Crude oil prices settled higher on Wednesday, after US government data showed a surprise decline in domestic supplies last week.

What happened: WTI crude prices recovered on Wednesday, after hitting their weakest level in around eight weeks earlier in the session.

The gains were contained, however, by strength in the US dollar.

Why it matters: The Energy Information Administration (EIA) said on Wednesday that US commercial crude inventories had declined by 1.4 million barrels to 459.5 million barrels in the week ended May 3. The decline came against market expectations of gains of 300,000 barrels. The American Petroleum Institute (API) had late Tuesday reported an increase of 509,000 barrels in crude stockpiles.

The EIA report also showed a weekly supply gain of 900,000 barrels for gasoline, while distillate stockpiles rose 600,000 barrels. Markets had widely expected gasoline inventories to contract by 800,000 barrels and distillate inventories to decline 1.1 million barrels.

US oil production came in unchanged at 13.1 million bpd (barrels per day). However, the EIA said it sees slower demand growth for oil globally in 2024.

Some strength in the US dollar limited the overall gains for crude oil prices, as a higher greenback makes commodities more expensive for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, added around 0.13% to reach 105.55 on Wednesday.

WTI crude for June delivery gained 61 cents to close at $78.99 a barrel on the NYMEX (New York Mercantile Exchange) after falling to an eight-week low of $76.89 earlier in the session. July Brent crude, the global benchmark, rose 42 cents to settle at $83.58 a barrel on ICE Futures Europe, after hitting its weakest level since mid-March.

In other energy trading, June gasoline lost 1 cent to $2.53 a gallon, while June heating oil added 1 cent to $2.48 a gallon. Natural gas for June delivery closed at $2.19 per million British thermal units, down 2 cents on Wednesday.

What to watch: Investors await the release of the EIA’s data on natural gas supplies from the US today. Analysts expect natural gas supplies to increase by 87 billion cubic feet during the latest week, compared to a rise of 59 billion cubic feet in the week ended April 26.

Markets will also focus on geopolitical concerns and the policy meeting of the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) on June 1.

The markets today

Uber Technologies will be in focus today after releasing results for its first quarter

Context: Shares of Uber fell on Wednesday after the company reported an unexpected loss for the latest quarter.

Details: The ride-share and food delivery company recorded a net loss of $654 million for the first quarter, versus analyst projections of a net profit of $503.1 million.

Uber reported 20% year-over-year growth in gross bookings to $37.65 billion, with Mobility Gross Bookings surging 25% to $18.67 billion and Delivery Gross Bookings rising 18% to $17.7 billion, more than offsetting an 8% decline in Freight Gross Bookings.

The company’s revenues grew by 15% year-over-year to $10.10 billion. The loss in the quarter was mainly due to legal charges and provisions related to driver lawsuits. Meanwhile, smaller rival Lyft is focusing on improving driver conditions to reduce customer wait times. Against this backdrop, Uber CEO Dara Khosrowshahi said, “More than 7 million people now choose to earn flexibly on Uber every month, with driver earnings of $16.6 billion continuing to grow faster than our topline.”

Management guided to gross bookings between $38.75 billion and $40.25 billion for the second quarter, broadly in-line with market expectations.

How shares responded: Uber’s shares tanked 5.7% to close at $66.40 on Wednesday, following the release of quarterly results. The stock has lost around 12% over the past month.

What to watch: Markets will continue monitoring Uber’s gross bookings figure and the status of driver lawsuits. Investors will also watch moves made by rivals to grab market share.

Other Markets: European indices closed higher on Wednesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.49%, 0.37%, 0.69% and 0.34%, respectively.

The news shaping the markets

Ukraine’s parliament passed a bill enabling some prisoners to join the armed forces with the military facing a shortage in personnel. The news sent the RUB/USD pair slightly lower in forex trading this morning.


The Philippines said its GDP grew by 5.7% year-over-year in the first quarter, up from 5.5% in the prior period. However, the latest reading falling short of market expectations of 5.9% growth exerted pressure on the PHP/USD forex pair.


Japan’s foreign reserve assets declined to $1.279 trillion in April, from $1.291 in the previous month. This being the weakest level in five months sent the JPY/USD pair lower in forex trading this morning.


UK’s RICS Residential Market Survey house price balance came in unchanged at -5% in April. However, this missed market estimates of -2%, exerting pressure on the GBP/USD forex pair.


The Central Bank of Brazil slashed its key Selic rate by 25 basis points during its May meeting, sending the BRL/USD pair slightly lower in forex trading this morning.

What else to watch today

Saudi Arabia’s industrial production, France’s foreign exchange reserves, Turkey’s foreign exchange reserves and Central Bank of Turkey’s interest rate decision, South Africa’s manufacturing production, Bank of England’s interest rate decision, Mexico’s inflation rate and Bank of Mexico interest rate decision, US initial jobless claims and continuing jobless claims, as well as Indonesia’s motorbike sales.


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