What’s happening: Crude oil prices recorded gains on Wednesday, as investors assessed US inventories data.
What happened: Official US data showed a third straight weekly decline in commercial crude inventories.
Weakness in the US dollar also provided support to crude oil prices on Wednesday.
Why it matters: Crude oil prices had come under pressure following downbeat data on economic growth and China’s crude consumption. Brent prices recorded its weakest settlement in a month on Tuesday.
The Energy Information Administration (EIA) said on Wednesday that US commercial crude inventories declined by 4.9 million barrels in the week ended July 12, after contracting in each of the prior two weeks.
The decline came against market expectations of an increase in crude supplies of 540,000 barrels.
The EIA report also showed gasoline supplies rising 3.3 million barrels and distillate supplies gaining 3.5 million barrels. Analysts were expecting gasoline inventory to decline by 700,000 barrels and distillate supplies to increase 590,000 barrels.
US oil production came in unchanged at 13.3 million bpd (barrels per day) in the latest week, while demand for gasoline moved lower. Total motor gasoline product supplied, a proxy for demand, fell to 8.783 million bpd, compared to 9.398 million bpd in the prior week.
Weakness in the US dollar also lent support to crude oil on Wednesday 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 around 0.5% to 103.75 on Wednesday.
WTI crude for August delivery gained $2.09 to close at $82.85 per barrel on the NYMEX (New York Mercantile Exchange) on Wednesday, after closing Tuesday’s session at its weakest level in over three weeks.
September Brent crude, the global benchmark, gained $1.35 to settle at $85.08 per barrel on ICE Futures Europe, after settling at a one-month low on Tuesday.
In other energy trading, August gasoline gained 2 cents to $2.50 a gallon, while August heating oil climbed 3 cents to $2.49 a gallon. Natural gas for August delivery bucked the trend and fell 15 cents to $2.04 per million British thermal units, after adding 1.4% in the previous session.
What to watch: Investors await the release of the EIA’s data on natural gas stockpiles. US natural gas supplies, which increased by 65 billion cubic feet during the week ended July 5, are expected to rise by 55 billion cubic feet in the recent week.
Context: Shares of Johnson & Johnson gained on Wednesday after the company posted better-than-expected second-quarter results.
Details: The pharma giant topped market expectations for the second quarter on Wednesday, amid strong sales of its drugs.
The company said Stelara sales grew 3.1% to $2.89 billion, surpassing market expectations of $2.77 billion, while sales of blood cancer drug Darzalex jumped 18.4% to $2.88 billion, compared to estimates of $2.86 billion.
Johnson & Johnson said overall quarterly adjusted earnings rose 10.2% year-over-year to $2.82 per share, beating consensus estimates of $2.70 per share. The company’s sales grew 4.3% year-over-year to $22.45 billion, topping Wall Street expectations of $22.31 billion.
Innovative Medicine sales rose 5.5% to $14.49 billion, with growth boosted by higher sales of Stelara, Darzalex, Tremfya, Erleada and Spravato. MedTech sales rose 2.2% to $7.96 billion during the latest quarter.
“With a robust pipeline, upcoming regulatory milestones for RYBREVANT and TREMFYA, the integration of Shockwave, and continued expansion of newly launched products, including ACUVUE OASYS MAX 1-Day contact lenses and our VARIPULSE platform, we have a strong foundation for near and long-term growth,” CEO Joaquin Duato said during the earnings call.
Management guided to fiscal 2024 operational sales between $89.2 billion and $89.6 billion and adjusted earnings of $9.97 to $10.07 per share.
How shares responded: Johnson & Johnson’s shares climbed 3.7% to close at $156.58 on Wednesday following the release of quarterly results. The stock climbed around 7% over the past month.
What to watch: Investors will continue monitoring decisions on several lawsuits the company has been facing associated with its talc-based products.
Other Markets: European indices closed mostly lower on Wednesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.44%, 0.12% and 0.48%, respectively, and the FTSE 100 up by 0.28%.
Germany is reportedly planning on slashing its military aid to Ukraine from €8 billion to €4 billion in 2025 The news sent the RUB/USD pair higher in forex trading this morning.
South Africa’s retail trade rose by 0.8% year-over-year in May, accelerating from a 0.7% gain in the previous month, which lent support to the ZAR/USD forex pair.
Eurozone’s annual inflation rate slowed to 2.5% in June, from 2.6% in May. The latest reading coming in better than the 5.5% rate recorded in the year-ago month sent the EUR/USD pair lower in forex trading this morning.
UK’s producer prices increased 1.4% year-over-year in June, easing from the one-year high of 1.7% in the prior month. The reading also came in lower than market estimates of 1.8%, lending support to the GBP/USD forex pair.
Japan recorded a trade surplus of ¥224.04 billion in June, compared to market expectations of a deficit of ¥240 billion. However, the JPY/USD pair fell in forex trading this morning.
UK’s unemployment rate, average weekly earnings, employment change, claimant count change and HMRC payrolls change, Eurozone’s construction output, European Central Bank’s interest rate decision and European Union’s new passenger car registrations, South Africa’s value of building plans passed and South African Reserve Bank interest rate decision, Turkey’s gross foreign exchange reserves, US initial jobless claims, Philadelphia Fed Manufacturing index, continuing jobless claims, net long-term TIC flows, net purchases of treasury bonds and notes, and net treasury international capital flows, as well as Argentina’s balance of trade and economic activity estimator.