A new oil setback .. and negative trading on Wall Street and Asia

A new oil setback .. and negative trading on Wall Street and Asia

A new oil setback.. and negative trading on Wall Street and Asia

A new oil setback .. and negative trading on Wall Street and Asia: Oil declined by more than 3% yesterday, Monday,
and now it is starting the trading session, coming close to falling below the $70 level, which scares investors. 

Evest follows all developments in the commodity trading market in the following report. 

Oil continues to decline after yesterday’s setback

Oil prices declined after an initial recovery on Tuesday, with concerns about coronavirus restrictions, along with a slowdown in factory activity in major markets, affecting morale.

The October futures price for Brent oil on the London Stock Exchange on the morning of August 3 was $72.84. Which is 0.07% lower than the closing price of the previous session.

At the end of August 2, these futures declined by $ 3.3% to $ 72.89 per barrel.

The price of West Texas Intermediate crude futures in September in electronic trading on the New York Mercantile Exchange (NYSE) was US $71.2 as of the morning of August 3.

Which is 0.08% lower than the final value of the previous session. The day before these futures fell 3.6% to $71.26.

That is, both benchmarks fell more than 3% on Monday.

Economic risks to the main oil consumer

This follows the resurgence of economic risks to the major oil consumer, China, resulting from the Coronavirus pandemic.

Infections of a highly contagious delta variant have emerged in 14 of 32 provinces.

That could mean adding new mobility restrictions.

Analysts also pointed out that the slowdown in manufacturing activity as a major concern for both China and the United States affected prices as well.

Chinese economic activity continued to decline in July, as the Manufacturing Purchasing Managers’ Index fell to 50.4 from 50.9 in June.

Manufacturing activity also slowed in the United States, where the ISM index fell to 59.5 – the lowest reading since January – from 60.6 in June.

Asian stock markets were significantly negative on Tuesday, as the Coronavirus Delta variant swept through major markets and Chinese authorities taught video game producers, once again undermining investors’ confidence in mainland markets.

Iranian Ministry of Foreign Affairs

Meanwhile, the Iranian Foreign Ministry said on Monday that Iran would immediately respond to any threats to its security,
after the United States, Israel, and Britain blamed Tehran for an attack on an Israeli – run oil tanker off the coast of Amman.

Inventories of crude oil and United States products were likely to have declined last week,
with reserves for distilleries and gasoline expected to decline for the third week in a row, according to a preliminary Reuters poll on Monday. 

Traders fear that the rapid spread of the new Covid-19 strain “delta” in Asian countries, including China,
will force countries to impose new quarantine restrictions, weakening the region’s economic recovery and oil demand.

The Indonesian government, the largest consumer of gasoline in Asia, announced on August 2 that quarantine restrictions in a number of regions would be extended until August 9 due to the high Covid-19 prevalence. 

From July 3 to 25, during the first wave of quarantine measures introduced in the country after the emergence of the Delta strain,
Indonesia reduced its gasoline imports by about a quarter, according to Bloomberg.

On the other hand, there are accusations from Washington politicians that China may be the inventor of the coronavirus. 

Dow Jones and Standard & Poor’s declined .. and the Nasdaq is stable

Tuesday is a fairly weak day in terms of economic news, so it’s expected that global market-constrained dynamics will remain ahead of Wednesday’s release of important economic data (country services PMI and US jobs growth estimate from ADP). 

In the United States on Monday, the Dow Jones and Standard & Poor’s 500 index fell by 0.2-0.3٪,
and the Nasdaq added less than 0.1%, although positive dynamics prevailed at the beginning of trading. 

Despite expectations of a strong economic recovery and a good corporate reporting season in the United States,
investors are concerned about the spread of new strains of coronavirus.

The positive factor for the market was the news that US senators approved an infrastructure spending project totaling about $1 trillion.

The project is bipartisan and could be approved by the Senate in the coming days.

The law provides for extensive investments in roads, bridges, ports, high-speed Internet, and other infrastructure.

It’s the first phase of President Joe Biden’s infrastructure plan. The document provides for expenditures of $550 billion over the first five years.

The US manufacturing business index (ISM Manufacturing) fell in July to 59.5 points (a half-year minimum) with a growth forecast to 61 points from 60.6 points in June. ISM Manufaction remained above the 50-point mark for 14 months in a row.

Meanwhile, the final value of the Purchasing Managers’ Index (PMI) in the industrial sector, calculated by IHS Markit, in July,
reached a record high of 63.4 points, rather than 63.1 points, as previously announced. In June, it was at 62.1 points.

A mass loss in Asia

On Tuesday, Asian stock indices were down (Japan’s Nikkei 225 drowning 0.5 percent, China’s Shanghai Composite -0.6 percent,
Hong Kong’s Hang Seng 0.3 percent) amid expectations of increased pressure on China’s technology sector.

The Japanese authorities extended the emergency in a number of areas until August 31,
and also announced their intention to tighten controls on tourists coming into the country.

A new oil setback .. and negative trading on Wall Street and Asia

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