The US corporate earnings season.. and oil is trying to recover
The US corporate earnings season.. and oil is trying to recover: Today, oil turned bullish again,
hoping for positive results from the American Petroleum Institute, indicating the continued decline in US inventories.
Evest follows all developments in the commodity trading market and conveys them to you in this report.
Oil turns bullish after yesterday’s setback
Benchmark oil prices rose during trading today, Tuesday, after the decline that followed the previous session.
September futures for Brent North Sea blend raised $0.19 to $75.35, and August futures for West Texas Intermediate raised $0.23 to $74.33 a barrel.
Yesterday, oil prices fell slightly after the rapid growth last week.
Thus, the price of Brent North Sea crude on the Intercontinental Exchange fell 0.53% to $74.79 a barrel,
while the price of Texas Crude fell 0.65% to $73.55 a barrel.
Monday’s drop in prices may be accompanied by the US Department of Energy’s published forecasts for the expected
growth in oil production in the largest oil and gas states in August of about 0.5% versus July.
The Saudi Energy Ministry
Meanwhile, the Saudi Energy Ministry announced that Saudi Arabia and the Sultanate of Oman had agreed to maintain stability in the oil market.
Most likely, this vague statement implies the statement of these two countries about the importance of market
regulation within the framework of OPEC +, which is likely to motivate the market for a slight increase this morning.
In general, the price of Brent oil is still volatile in the corridor from 73 to 75.5 dollars per barrel, but if for a long time,
for example, several weeks, there is no news from OPEC + that the alliance is ready to negotiate again,
then it is not excluded that the price will fall to $71 a barrel.
The increase in prices is also due to the fact that countries are beginning to lift restrictions as the world’s vaccination efforts accelerate,
and expectations that increased travel will have a positive impact on oil demand.
In the forecast to be announced by the American Petroleum Institute today,
if a decrease in US commercial crude oil inventories is indicated, prices are expected to rise further.
On the other hand, potential demand risks that may arise due to concerns about the COVID-19 delta variant,
which is known to be more contagious and resistant, continues to suppress oil prices.
While the Organization of the Petroleum Exporting Countries (OPEC) and the OPEC group,
which is made up of some non-OPEC producing countries,
have not yet reached an agreement on the production policy to be implemented from August,
the news is expected to flow on the matter.
They pointed to sudden increases and decreases in prices since the meeting was canceled,
and experts say that the conflict between OPEC countries has heightened fears of the possibility of irregular production after July.
The US reports awaited
In the US, important statistics on consumer inflation for June will be released today,
and prices are expected to rise 4.9% in annual terms compared to 5.0% in May.
In contrast, core CPI could accelerate to 4.0% from 3.8% in May.
Next, there will be a report on the implementation of the US federal budget in June,
and the day will be closed with API statistics on US oil reserves and petroleum products.
Federal Reserve officials continue to calm the benchmark market.
New York Fed President John Williams said that talk of a rate hike can only take place after the regulator completely limits the asset purchase program.
But he stressed that the conditions for curtailing the program have not yet appeared.
Once again, reiterate the Fed’s assessment that the current rise in inflation is likely a temporary phenomenon.
However, inflation does not appear to be temporary.
The New York Fed survey showed an increase in inflationary expectations in June to 4.8%,
the maximum value in a fairly short history of the study. The three-year forecast remained at 3.6%.
Corporate news from the US will be able to support the markets in the middle of the week if corporate expectations remain positive.
But at the end of the week, the situation remains cautious, as it is imbued with important statistics from the US and China,
which could worsen the economic outlook and market sentiment,
if analysts’ expectations are justified, which are currently conservative.
US indices achieve a positive session
In the US, stocks rose 0.2-0.4% on Monday, hitting record closing levels for the second consecutive session.
Market participants will focus on the US corporate reporting season,
which kicks off unofficially on Tuesday by big banks such as JPMorgan and Goldman Sachs.
In addition, this week investors are awaiting the words of Federal Reserve System (FRS) Chairman Jerome Powell in the US Congress (July 14 and 15)
and the release of data on consumer price dynamics and retail sales volume in the country in June.
Profits of US companies, whose shares are included in the Standard & Poor’s 500 index,
rose in the second quarter by nearly 63% after increasing by 52.5% in the January-March period, according to forecasts by FactSet.
If expectations are warranted, the jump in the index in the last quarter will be the most significant in more than a decade
— since the financial crisis of 2008-2009, the Financial Times wrote.
The lack of some components of manufacturing, as well as labor resources, has curbed economic growth in the United States and led to a temporary increase in inflation,
according to the Federal Reserve’s semi-annual report on the state of the US economy.
The Fed said in a report that vaccination has led to an open economy and strong growth.
“However, shortages in manufacturing components and staffing problems have limited activity in a number of industries.”
According to the Wall Street Journal, the Federal Reserve’s semi-annual report shows that the leadership of the US central bank
is losing confidence that the labor market can return to pre-crisis conditions without triggering inflation.
Positive trading in Asia
On Tuesday, positive indices dynamics also prevailed in Asia.
Japan’s Nikkei rose 0.5%, China’s Shanghai Composite 0.5%, and Hong Kong’s Hang Seng 1.7%.
Experts say the positive impact on investor sentiment led to US stock indexes rising the day before in anticipation of a strong corporate reporting season,
as well as data on China’s foreign trade.
China’s exports in June increased by 32.2% compared to the same month last year – to $281.42 billion.
Growth continued for the 12th month, while the rate of increase accelerated compared to 27.9% in May.
Imports rose last month by 36.7% to $229.89 billion, down from 51.1% in May, the highest in a decade.
Experts, on average, expected the first indicator to rise by 23.1%, and the second – by 30%.
China’s trade surplus in June was $51.53 billion (the highest level in five months) versus $44.8 billion in the same month a year earlier.
The consensus forecast was $44.2 billion.
The US corporate earnings season… and oil is trying to recover