After the sluggish wages data yesterday, the pound was hit again this morning on news UK inflation remained flat in June, raising further doubts over an August rate hike from the Bank of England. But this was good news for the stock markets, with the commodity-heavy FTSE 100 extending its gains after a sizeable rally the day before and despite ongoing weakness in prices of crude oil and metals.
Fed Chairman Jerome Powell’s testimony took its toll on crude oil, and a bearish report from the American Petroleum Institute (API) isn’t helping either. The Fed chairman caused the dollar to soar which pressured many commodities as he told the Senate Banking Committee that "Several years” of strong jobs, low inflation still ahead of us."
Intercontinental Exchange Inc. (ICE), a leading operator of global exchanges and clearing houses and provider of data and listings services, announced plans to launch a physically delivered Permian West Texas Intermediate (WTI) crude oil futures contract, deliverable in Houston, Texas. The Houston delivery point has become the pricing center for U.S. crude oil production and exports, and the new flat price futures contract is designed to serve hedging and trading opportunities in this growing market.
Asian equities fell on Tuesday after crude oil prices tumbled by more than 4.6% during the previous session, following reports that Saudi Arabia has offered additional crude supplies to some of its Asian customers and that the U.S. may release some of its strategic petroleum reserves to bring prices down.
Equity markets have softened from Sunday night. The Nasdaq plunged just ahead of settlement after Netflix missed subscriber growth expectations. However, it wasn’t all bad news heading into the close as the Russell 2000 halved a loss of 1% in the last hour. While many sectors notched losses, it was the banks that lifted more than their weight with Bank of America +4.3%, JP Morgan +3.97%, Citigroup +3.67% and Wells Fargo +2.94%.
Crude prices got whacked on oil supply, real and imagined. Talk of futures strategic petroleum reserve releases along with signs of real increases of production in some OPEC countries sent oil into the basement. Weak economic data out of China and some warnings about trade wars by the International Monetary Fund did not help and it overshadowed the reality that U.S. oil supplies will probably fall dramatically again this week.
Today’s meeting between President Trump and Russian President Putin is more symbolic than anything. Sanctions, the U.S election meddling and Syria are expected topics, but we are unlikely to find real substance coming from this headline-grabbing summit. Earnings and economic data are the headlines we are paying attention to most closely this morning.
The world’s oil-consuming nations are showing growing unease about the rapidly tightening global crude oil market and are considering releasing oil from their strategic petroleum reserves. On Friday, Bloomberg News reported that the Trump Administration is reviewing options ranging from a 5 million-barrel test sale to the release of 30 million barrels from its oil reserve to cool pump prices ahead of congressional elections in November and as sanctions on Iran are due to snap back.