Thursday, August 1, 2029
Crude oil and refined products futures are seeing losses of over one percent in early trading Thursday morning amid a continued rally in the US dollar index, despite strength in European equities and US stock market index futures following mixed but largely supportive economic data releases. Asian shares fell following weakness in US equities in yesterday’s session. Market traders are looking ahead to US jobless claims and manufacturing data for further direction.
The US dollar was rallying against a basket of currencies, with the dollar index trading at levels not seen since May of 2017. Whereas this was likely weighing in dollar-denominated crude oil prices, economic data releases – largely on the manufacturing sector – were largely supportive. The Japanese manufacturing sector continued to contract last month, and at a slightly faster than predicted pace with the Markit PMI at 49.4. On the other hand, the Markit PMI for China beat expectations at 49.5 with a 49.9 print, nearly out of contractionary territory. Expansion in the Indian manufacturing sector quickened, with the Markit/Nikkei index up from 52.1 to 52.5.
The Eurozone manufacturing PMI fell from 47.6 to 46.5, but beat the consensus estimate at 46.4. The index for Germany beat expectations, but the index for France fell short. In the UK, the CIPS PMI was also stronger than expected, holding at 48.0. Although many releases beat expectations, they do also highlight contraction in various manufacturing sectors amid concerns over global trade. The Bank of England made its policy decision, keeping policy settings steady, consistent with widely-held expectations. Weekly initial US jobless claims are due ahead of the NYMEX open this morning, expected to rise to 214,000, and the ISM Manufacturing Index is due at 10:00am and expected to rise from 51.7 to 51.9.
The energy complex rallied yesterday amid bullish crude oil inventory figures from the Energy Information Administration in its weekly report, the declaration of force majeure on El Sharara crude oil in Libya, and a 25 basis point interest rate cut by the Federal Open Market Committee, despite weakness in US equities and strength in the dollar following that FOMC decision. Brent crude strengthened 45 cents, settling at $65.17 a barrel, WTI crude gained 53 cents to close at $58.58 a barrel, gasoline futures edged up 51 points to $1.9020 per gallon, heating oil was up 1.10 cents to close at $1.9550 per gallon and natural gas futures jumped 9.6 cents higher to settle at $2.233 per MMBTU.