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What’s happening: Crude oil prices rose for the second straight session on Tuesday amid persistent geopolitical concerns.
What happened: The second round of peace talks between Russia and Ukraine made practically no headway in resolving the conflict.
A wildfire in Canada and the decision by the OPEC+ to not increase production hikes led to supply concerns.
Why it matters: Russia and Ukraine ended their second round of talks on Monday. Expectations were low for any breakthrough on a settlement, following a string of attacks over the weekend. Russia, which was the world’s second largest producer of crude in 2024, behind only the US, continues to face sanctions.
A wildfire in Alberta, Canada, has resulted in the temporary closure of some oil and gas output, intensifying supply worries. Meanwhile, OPEC+ (Organization of the Petroleum Exporting Countries and its allies) kept its production hikes for July at 411,000 bpd (barrels per day), the same as in the previous two months.
An Iranian diplomat said on Monday that the country was poised to reject an offer from the US to end a nuclear dispute, saying it did not address the region’s interests or soften the US stance on uranium enrichment. Iran was the third biggest crude producer in the OPEC group in 2024.
Strength in the US dollar limited the gains for crude oil, 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, gained more than 0.5% to 99.23 on Tuesday.
WTI crude oil prices rose 89 cents, or around 1.5%, to close at $63.41 a barrel on Tuesday, while Brent crude prices surged about 1.6% to settle at $65.63 a barrel.
In other energy trading, gasoline gained more than 1% to settle at $2.0788 a gallon, while heating oil surged more than 2.5% to close at $2.0999 a gallon and natural gas settled higher at $3.722 per million British thermal units.
What to watch: Investors await the release of data on crude oil, gasoline stocks and distillate stockpiles from the US Energy Information Administration today (1830 UAE Time). Crude oil inventories in the US declined by 2.795 million barrels during the week ended May 23, compared to market estimates of a gain of 0.6 million barrels. Stocks of gasoline in the US fell by 2.441 million barrels in the latest week, while distillate inventories declined by 0.724 barrels in the May 23 week.
Context: The EUR/USD forex pair fell on Tuesday as investors assessed the latest economic data.
Details: Data released on Tuesday showed Eurozone consumer price inflation fell to 1.9% year-over-year in May, from 2.2% in the previous month. The figure came in below market estimates of 2.0%. The latest reading showed the easing of inflation below the European Central Bank’s 2.0% target for the first time since September 2024, which raised prospects of an interest rate cut by the central bank later this week and further cuts ahead.
The Eurozone’s unemployment rate fell to 6.2% in April, from 6.3% in the previous month. The figure came in-line with market estimates.
Meanwhile, the OECD slashed its global growth outlook to 2.9% in both 2025 and 2026, compared to 3.3% in 2024, citing persistent trade tensions.
Strength in the US dollar index also weighed on the EUR/USD forex pair on Tuesday, with the index gaining over 0.5% during the session.
The EUR/USD forex pair fell more than 0.6% to 1.1372 on Tuesday, while the EUR/GBP pair slipped 0.4% to 0.8413.
What to watch: Investors await the release of economic data on Eurozone’s HCOB composite PMI (1200 UAE Time) and HCOB services PMI (1200 UAE Time) today. The HCOB Eurozone Composite PMI is expected to decline to 49.5 in May, from 50.4 in the previous month, while analysts expect the services PMI to fall to 48.9, from 50.1 in April.
Other Markets: US trading indices closed higher on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 up by 0.51%, 0.58% and 0.79%, respectively.
Senior Ukrainian officials arrived in the US on Tuesday to seek deeper support, with peace negotiations with Russia faltering. The news sent the RUB/USD pair higher in forex trading this morning.
Singapore’s S&P Global PMI declined to 51.5 in May, from 52.8 in the previous month. This being the lowest since February exerted pressure on the SGD/USD forex pair.
Hong Kong’s S&P Global SAR PMI climbed to 49.0 in May, from 48.3 in the previous month. However, the region’s private sector activity remaining in the contraction zone sent the HKD/USD pair slightly lower in forex trading this morning.
Japan’s au Jibun Bank services PMI was revised higher to 51.0 for May, from a preliminary reading of 50.8, lending support to the JPY/USD forex pair.
Thailand’s S&P Global manufacturing PMI climbed to 51.2 in May, from 49.5 in the previous month. This being the first expansion in the region’s manufacturing activity since February sent the THB/USD pair higher in forex trading this morning.
Eurozone’s 3-month Bill auction (1510 UAE Time) and 6-month Bill auction (1510 UAE Time), UK’s S&P Global composite PMI (1230 UAE Time), S&P Global services PMI (1230 UAE Time) and 3-year Treasury Gilt auction (1300 UAE Time), South Africa’s business confidence (1400 UAE Time), US MBA mortgage applications (1500 UAE Time), ADP employment change (1615 UAE Time), S&P Global composite PMI (1745 UAE Time), S&P Global services PMI (1745 UAE Time), ISM services PMI (1800 UAE Time), ISM services new orders (1800 UAE Time), 17-week Bill auction (1930 UAE Time) and Fed Beige book (2200 UAE Time), Mexico’s gross fixed investment (1600 UAE Time), Canada’s labour productivity (1630 UAE Time), S&P Global composite PMI (1730 UAE Time), S&P Global services PMI (1730 UAE Time) and Bank of Canada’s interest rate decision (1745 UAE Time), Brazil’s S&P Global services PMI (1700 UAE Time) and S&P Global composite PMI (1700 UAE Time), as well as Russia’s unemployment rate (2000 UAE Time), business confidence (2000 UAE Time), corporate profits (2000 UAE Time), real wage growth (2000 UAE Time) and retail sales (2000 UAE Time).
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