1/7/2024–|Last updated: 7/1/202402:37 PM (Mecca time)
Crude oil prices rose in early trading today, supported by expectations of a supply deficit caused by peak fuel consumption in the summer and OPEC+ cuts in the third quarter, but adverse economic trends and increased production from outside the OPEC+ group limited gains. While the euro rose after the result of the first round of the French elections, gold prices stabilized, supported by data showing a decline in inflation in America.
Brent crude futures rose 48 cents, or 0.56%, to $84.48 a barrel at the time of writing, while U.S. West Texas Intermediate crude futures rose 49 cents, or 0.6%, to $82.03 a barrel.
The two crude oil prices rose about 6% in June, as the price of Brent at settlement reached more than $85 per barrel in the past two weeks after the OPEC Plus group, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, extended most of its significant cuts in oil production until the end of 2025. .
In light of this, analysts expected a supply shortage in the third quarter of this year, as demand for transportation and air conditioning equipment during the summer leads to a decrease in fuel stocks.
In the United States, oil production and demand rose to a 4-month high in April, according to the Energy Information Administration’s monthly oil supply report published on Friday.
“We remain supportive on Brent, despite demand concerns, such as gasoline demand in the US and apparently demand from China,” ING analysts said in a note.
A private index showed activity in China’s small factories grew at the fastest pace since 2021, boosted by overseas orders, even as a broader survey pointed to weak domestic demand and trade disputes leading to another contraction in the industrial sector.
China is the world’s second largest consumer of crude oil and its largest importer.
IG analyst Tony Sycamore wrote in a note that hopes for a US Federal Reserve (central bank) cut in interest rates and growing geopolitical concerns in Europe and between Israel and Lebanese Hezbollah also contributed to prices remaining above a certain level, according to what Reuters reported.
He added that the recent rise in US West Texas Intermediate crude may extend towards $85 per barrel if prices remain above the 200-day moving average at $79.52.
currency market
Within the markets, the euro rose today, after a far-right coalition topped the first round of the French parliamentary elections, while the yen struggled to move away from its lowest levels in 38 years.
Polls of voters’ opinions after they left the polls showed that the far-right National Rally party led by Marine Le Pen won the first round of the French parliamentary elections held yesterday, Sunday, but the coalition won a smaller share of the votes than some opinion polls initially expected.
The euro, which has fallen about 0.8% since President Emmanuel Macron called elections on June 9, rose 0.4% to $1.0755, after touching a two-week high earlier in the session.
The euro’s rise pushed the dollar slightly lower against a basket of six major currencies, but the greenback was also suffering from data on Friday showing U.S. inflation slowed in May, boosting expectations the Federal Reserve will start cutting interest rates later in the year.
According to the CMA’s FedWatch tool, markets are roughly 63% anticipating a Fed cut in September, compared to a 55% chance a month ago.
Against the dollar, the British pound rose 0.22% to $1.2669, and the Australian dollar rose 0.18% to $0.6678 after falling 0.07% during today’s trading.
The dollar index fell 0.27% to 105.58 points, after earlier recording its lowest level in a week.
gold
Gold prices steadied on Monday, supported by data showing U.S. inflation eased in May, boosting hopes that the Federal Reserve will start cutting interest rates this year.
Spot gold was little changed at $2,326.81 an ounce at the time of writing, having jumped more than 4% in the second quarter of this year.
US gold futures fell 0.08% to $2,337.4.
Data on Friday showed that the personal consumption expenditures index in the United States rose 2.6% on an annual basis until the end of May, after rising 2.7% in April, while inflation readings for the month were in line with economists’ expectations.
According to the CMA’s FedWatch tool, markets are roughly 64% anticipating a rate cut from the Federal Reserve in September.
Lower interest rates reduce the opportunity cost of holding the non-yielding yellow metal.
