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Oil surges amid a decline in crude inventories

 

Thursday, March 14, 2024

Today’s headlines

What’s happening: Oil prices moved higher on Wednesday as investors assessed the release of crude inventory data from the US.

What happened: The WTI recorded its first increase in five sessions after data showed a decline in US crude supplies.

Mounting tensions between Russia and Ukraine after attacks were reported on Russia’s energy infrastructure also provided a boost to oil prices.

Why it matters: The US Energy Information Administration (EIA) reported a decline in both crude oil stockpiles and gasoline inventories in the latest week.

US commercial crude inventories contracted by 1.5 million barrels in the week ended March 8, recording the first weekly decline in seven weeks. Markets were expecting an increase of 6.5 million barrels.

The American Petroleum Institute (API) said on late Tuesday that crude inventories had declined by 5.5 million barrels.

The EIA report also showed gasoline supplies falling 5.7 million barrels, which surpassed market expectations of a decline of 2.7 million barrels. Distillate supplies unexpectedly rose by 900,000 barrels in the latest week, versus expectations of a decline of 1.1 million barrels.

US oil production also fell by 100,000 barrels to 13.1 million barrels per day in the latest week, the EIA reported.

Earlier during the month, the OPEC+ (Organization of the Petroleum Exporting Countries and their allies) had announced an extension to its voluntary output cuts through the second quarter.

WTI crude oil for April delivery gained $2.16 to close at $79.72 per barrel on the NYMEX (New York Mercantile Exchange) on Wednesday, after recording losses in the past four trading sessions. May Brent crude added $2.11 to settle at $84.03 per barrel on ICE Futures Europe.

In other energy trading, April gasoline rose by 7 cents to $2.66 a gallon, while April heating oil added 7 cents to $2.69 a gallon. Natural gas for April delivery fell 5 cents to $1.66 per million British thermal units, recording losses for the sixth consecutive session.

What to watch: Investors await the release of economic data on natural gas stockpiles today. US natural gas supplies had contracted by 40 billion cubic feet during the week ended March 1, in-line with market estimates.

Markets will continue monitoring the geopolitical situation, after attacks on several regions were reported in Russia.

The markets today

US stocks will be in focus today ahead of a basket of major economic reports

Context: US stocks closed mixed on Wednesday, with the tech-heavy Nasdaq 100 recording losses in the session.

Details: The benchmark S&P 500 index had surged to a new high on Tuesday. The index came under pressure with the release of consumer price data. The annual inflation rate accelerated to 3.2% in February, from 3.1% in January, and came in higher than expectations of 3.1%.

Data on producer prices for February will be released on Thursday, which will offer further insights into the US inflation rate, ahead of the much-awaited central bank meeting next week.

The US Federal Reserve is widely projected to keep interest rates unchanged in March and announce its first rate cut in June.

The tech-laden Nasdaq 100 settled lower on Wednesday, as higher Treasury yields weighed on growth shares. The yield on treasury notes rose, hitting rate sensitive stocks like Nvidia and Apple.

Dollar Tree’s stock tanked around 14% on Wednesday, after the company reported a net loss for the fourth quarter and announced plans to shut around 1,000 stores. Shares of Williams Sonoma jumped around 18% after the company reported upbeat quarterly results and boosted its dividend.

The Dow Jones index jumped 37.83 points, or 0.10%, to close at 39,043.32 on Wednesday. The S&P 500 slipped 0.19% to reach 5,165.31, which the Nasdaq 100 shed 0.83% to settle at 18,068.47.

What to watch: Investors await the release of economic reports on producer price inflation, retail sales and initial jobless claims from the US today. Producer prices for final demand in the US are expected to rise 0.3% in February, in-line with January’s reading.

Analysts expect retail sales to grow 0.8% in February, following a 0.8% decline in January. The number of people claiming jobless benefits in the US are expected to increase to 218,000 in the latest week.

Other Markets: European indices closed mostly higher on Tuesday, with the FTSE 100, CAC 40 and STOXX Europe 600 Index up by 0.31%, 0.62% and 0.16%, respectively, and the DAX 40 down by 0.02%.

The news shaping the markets

Russia’s President Vladimir Putin warned the US against sending troops to Ukraine, adding that the country was ready for a nuclear war. The news sent the safe-haven US dollar index higher in forex trading this morning.


UK’s RICS UK Residential Market Survey house price balance improved to -10 in February, from January’s reading of -18. The index remaining in the negative zone exerted pressure on the GBP/USD forex pair.


New Zealand’s number of visitor arrivals surged by 21.7% year-over-year to 326,427 in January, sending the NZD/USD pair higher in forex trading this morning.


Eurozone’s industrial production declined by 3.2% in January, compared to a 1.6% increase in December, which exerted pressure on the EUR/USD forex pair.


UK’s trade deficit widened to £3.129 billion in January, from £2.603 billion in the previous month, sending the GBP/USD pair lower in forex trading this morning.

What else to watch today

Saudi Arabia’s wholesale prices change and consumer prices, India’s wholesale prices, Spain’s consumer price index, South Africa’s Gold production, mining production and manufacturing production, Turkey’s gross foreign exchange reserves, Brazil’s retail sales, Canada’s manufacturing sales and new motor vehicle sales, US continuing jobless claims and business inventories, as well as China’s new yuan loans, money supply M2, value of outstanding loans and loans to private sector.


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