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What’s happening: Crude oil prices settled sharply higher on Wednesday amid ongoing geopolitical concerns.
What happened: Iran suspended cooperation with the International Atomic Energy Agency (IAEA), the UN nuclear watchdog.
While oil prices climbed on increased geopolitical risks, an unexpected rise in US crude supplies limited the overall gains.
Why it matters: Since June 25, Brent crude prices have fluctuated between a high of $69.21 and a low of $66.34 a barrel amid easing supply concerns in the Middle East due to the ceasefire agreement between Israel and Iran.
Iran’s President Masoud Pezeshkian signed a law that suspended the country’s collaboration with the IAEA. Iran’s Parliament voted 221-0 in favour of passing the law.
Following the news, markets priced in higher risk premium, sending oil prices higher on Wednesday.
Oil prices also received a boost from the US and Vietnam signing a trade agreement, setting 20% tariffs on several of the country’s exports.
Data released by the EIA (Energy Information Administration) exerted some pressure on oil prices. US crude oil inventories rose by 3.845 million barrels during the week ended June 27, versus market estimates of a contraction of 2 million barrels. The latest rise was the biggest in three months.
Stockpiles at the Cushing, Oklahoma, delivery hub declined by 1.493 million barrels last week. Gasoline inventories rose by 4.188 million barrels, while distillate fuel stockpiles declined by 1.710 million barrels during the week.
Strength in the US dollar also weighed on 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, rose around 0.2% to 96.78 on Wednesday.
Meanwhile, the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) is looking to gradually raise crude output. Saudi Arabia increased exports during June.
Brent crude gained 3% to close at $69.11 a barrel on Wednesday, while WTI crude surged $2.00, or 3.1%, to settle at $67.45 a barrel.
What to watch: Investors will continue monitoring the geopolitical environment, which is expected to significantly impact oil prices ahead.
Data from the EIA on natural gas stockpiles (1830 UAE Time), due to be released today, will also remain in focus. US natural gas stocks rose by 96 billion cubic feet in the week ended June 20.
Context: S&P 500 climbed to a record high on Wednesday, following a trade deal between the US and Vietnam.
Details: Wall Street stock indices have hit record highs this year, despite concerns over inflation and the Trump administration’s tariff policy.
US markets started Wednesday’s session on a lower note, after data showed a surprise decline in US private payrolls in June. US private businesses shed 33,000 jobs in June, logging the first decline since March.
However, the markets bounced back, taking the S&P 500 to a record high after the US and Vietnam announced a trade agreement. The Trump administration also signalled that a trade agreement with India is coming soon.
Oracle’s stock climbed 5% on an expanded Stargate deal with OpenAI. Seagate Technology’s share price hit a record high with several analysts bumping their price targets citing strengthening fundamentals. Shares of NXP Semiconductors rose around 4% on strong guidance for the second quarter.
The S&P 500 gained 0.47% to settle at 6,227.42 on Wednesday, while the Nasdaq 100 climbed 0.73% to settle at 22,641.89. The Dow Jones index bucked the trend, falling 0.02% to close at 44,484.42.
What to watch: Investors await the release of the nonfarm payrolls (NFP) report (1630 UAE Time) and ISM services PMI (1800 UAE Time) today.
Analysts expect US nonfarm payrolls to rise by 110,000 in June, the smallest rise in four months, following a gain of 139,000 jobs in May. The US unemployment rate is expected to rise to 4.3% in June, from 4.2% in May, while average hourly earnings for all employees on US private nonfarm payrolls are expected to grow by 0.3%. Analysts expect the ISM services PMI to improve to 50.5 in June, from 49.9 in May.
Other Markets: European indices closed mostly higher on Wednesday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.49%, 0.99% and 0.18%, respectively, and the FTSE 100 down by 0.12%.
Ukraine launched one of its deepest drone attacks inside Russia in the three-year conflict. The news sent the RUB/USD pair lower in forex trading this morning.
Japan’s au Jibun Bank services PMI was revised higher to 51.7 in June, from the preliminary reading of 51.5. The figure being higher than May’s 51.0 lent support to the JPY/USD forex pair.
Singapore’s S&P Global PMI fell to 51.0 in June, from 51.5 in the previous month. However, this being the fifth straight month of expansion in the private sector sent the SGD/USD pair higher in forex trading this morning.
Ireland’s AIB services PMI fell to 51.5 in June, from 54.7 in May. Services activity remaining in the expansion zone lent support to the EUR/USD forex pair.
South Korea’s foreign exchange reserves grew to $410.2 billion in June, from $404.6 billion in the previous month, which sent the KRW/USD pair higher in forex trading this morning.
Eurozone’s HCOB composite PMI (1200 UAE Time), HCOB services PMI (1200 UAE Time) and ECB monetary policy meeting accounts (1530 UAE Time), UK’s DMP 1Y CPI expectations (1230 UAE Time), S&P Global composite PMI (1230 UAE Time) and S&P Global services PMI (1230 UAE Time), Spain’s 10-year Index-Linked Obligacion auction (1240 UAE Time), 10-year Obligacion auction (1240 UAE Time), 15-year Obligacion auction (1240 UAE Time) and 3-year Bonos auction (1240 UAE Time), France’s 2035 OAT auction (1300 UAE Time), 2042 OAT auction (1300 UAE Time) and 2056 OAT auction (1300 UAE Time), Turkey’s foreign exchange reserves (1530 UAE Time), Mexico’s gross fixed investment (1600 UAE Time), Canada’s balance of trade (1630 UAE Time), US balance of trade (1630 UAE Time), initial jobless claims (1630 UAE Time), participation rate (1630 UAE Time), continuing jobless claims (1630 UAE Time), government payrolls (1630 UAE Time), manufacturing payrolls (1630 UAE Time), S&P Global composite PMI (1745 UAE Time), S&P Global services PMI (1745 UAE Time), factory orders (1800 UAE Time), 4-week Bill auction (1930 UAE Time), 8-week Bill auction (1930 UAE Time), 15-year mortgage rate (2000 UAE Time), 30-year mortgage rate (2000 UAE Time), Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time), as well as Brazil’s S&P Global services PMI (1700 UAE Time) and S&P Global composite PMI (1700 UAE Time).
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