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What’s happening: Crude oil continued to climb on Wednesday after recording losses earlier in the session.
What happened: Investor concern around supply disruptions grew with fears of US joining Israel in its war with Iran.
A decline in US stockpiles also lent support to crude oil prices on Wednesday.
Why it matters: Iran’s Supreme Leader Ayatollah Ali Khamenei rejected US President Donald Trump’s demand for an “unconditional surrender”. While speaking to reporters outside the White House, Trump declined to confirm his plans of a direct involvement by the US in the attack against Iran. “I may do it. I may not do it. Nobody knows what I’m going to do,” the US President said.
Markets fear that any direct involvement by the US would widen the ongoing conflict, which may increase the risk of an attack on Iran’s energy infrastructure. Iran is the third-largest producer in the OPEC (Organization of the Petroleum Exporting Countries).
Meanwhile, data released on Wednesday showed crude oil inventories in the US declined by 11.473 million barrels in the week ended June 13. This marked the steepest decline in a year and came in higher than market estimates of a drawdown of 2.3 million barrels. Meanwhile, stockpiles in the Cushing, Oklahoma delivery hub fell by 995,000 barrels last week. Among refined fuels, US gasoline stockpiles rose by 209,000 barrels, while stocks of distillate fuels rose by 514,000 barrels during the week.
Brent crude futures rose 25 cents to settle at $76.70 a barrel on Wednesday, while WTI crude gained 30 cents to close at $75.14 a barrel.
In other energy trading, gasoline rose to settle at $2.3086 a gallon, while heating oil added around 1% to close at $2.4949 a gallon and natural gas surged to $3.989 per million British thermal units.
What to watch: Investors will continue monitoring the ongoing Iran-Israel conflict, which could significantly impact crude supply ahead.
Data on Baker Hughes oil rig count, due to be released on Friday, will also remain in focus. Crude oil rigs in the US fell to 439 in the June 13 week, from 442 rigs in the previous week.
Context: The CAD/USD forex pair fell on Wednesday amid strength in the US dollar.
Details: Investors remained concerned about the escalation in the Iran-Israel conflict, which continued for the sixth consecutive day on Wednesday. Fears of the US joining the war resulted in investors preferring the safe-haven US dollar.
Strength in the US dollar exerted pressure on the CAD/USD forex pair. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.1% to 98.91 on Wednesday.
Canada Mortgage and Housing Corporation data showed that May’s six-month trend in housing starts came in unchanged at 243,407 units, while MLS-recorded home sales surged 3.6%.
Data released on Tuesday showed foreign investors lowering their holdings of Canada’s securities by C$9.36 billion during April, representing the third straight month of divestment. The figure was much higher than the previous month’s disinvestment of C$4.2 billion.
The CAD/USD pair fell around 0.1% to 1.3696 on Wednesday.
What to watch: Investors await the release of economic data on Canada’s CFIB business barometer (1500 UAE Time) today. Canada’s CFIB Business Barometer long-term index, which rose by 5.2 points to 40.0 in May, is expected to rise further to a reading of 43 in June.
Other Markets: US trading indices closed mixed on Wednesday, with the Dow Jones index and S&P 500 down by 0.10% and 0.03%, respectively, and the Nasdaq 100 up by 0.003%.
Ukrainian President Volodymyr Zelenskyy is considering attending the NATO summit in The Hague on June 24-25. The news sent the RUB/GBP pair slightly lower in forex trading this morning.
Australia’s employment declined by 2,500 to 14.62 million in May, compared to market estimates of a 25,000 gain, which exerted pressure on the AUD/USD forex pair.
New Zealand’s economy shrank by 0.7% year-over-year in the first quarter, after a 1.3% decline in the previous quarter, which sent the NZD/USD pair lower in forex trading this morning.
Brazil’s central bank raised its Selic rate by 25bps to 15% at its recent meeting, lending support to the BRL/USD forex pair.
China’s unemployment rate for persons in the age group of 16 to 24 years eased to an 11-month low of 14.9% in May. However, The CNY/USD pair fell slightly in forex trading this morning.
Spain’s 10-year Obligacion auction (1240 UAE Time), 5-year Bonos auction (1240 UAE Time) and 8-year Obligacion auction (1240 UAE Time), Eurozone’s construction output (1300 UAE Time), France’s 13-year OAT€i auction (1300 UAE Time), 3-year OAT auction (1300 UAE Time), 5-year OAT auction (1300 UAE Time), 6-year OAT auction (1300 UAE Time) and 9-year OAT€i auction (1300 UAE Time), South Africa’s building permits (1500 UAE Time), Turkey’s interest rate decision (1500 UAE Time) and foreign exchange reserves (1530 UAE Time), Bank of England’s interest rate decision (1500 UAE Time), as well as Argentina’s consumer confidence (1800 UAE Time), balance of trade (2300 UAE Time) and unemployment rate (2300 UAE Time).
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