Summary:
Oil prices dropped by almost 4% on Wednesday as markets weighed more weak economic data indicative of dire growth outlook.U.S. stocks closed mixed following strong quarterly results from Microsoft and Alphabet that both beat analyst expectations.
Oil prices dropped by almost 4% on Wednesday as markets weighed more weak
economic data indicative of dire growth outlook.
U.S. stocks closed mixed following strong quarterly results from Microsoft and Alphabet that both beat analyst expectations.
New orders for key U.S. manufactured capital goods fell more than expected in March and shipments also declined.
Commodities
Oil prices have erased all their gains since OPEC+ announced in early April an additional output reduction until the end of the year. Future prices are signaling a market weaker than normal, while spreads are signaling the opposite.
Brent’s 6-month calendar spread has slipped to a backwardation of $2.4 per barrel, down from $3.99 on April 12. Consumption is slack but expected to bounce back later.
EIA data shows U.S. crude inventories fell last week by 5.1 million barrels to 460.9 million barrels, far exceeding forecasts of a 1.5 million drop.
Refinery run help boost the demand side but that is offset by the expectation of lower crude exports, as the tightening of spreads weighs on buying appetite, noted lead oil analyst Matt Smith.
Forex
The Canadian dollar hit a 4-week low, dragged lower by oil price woes. The BoC paused earlier this month, waiting for more evidence of the effects of rate hikes on growth and inflation.
Canadian core inflation is expected to remain above 3% until the 4th quarter of this year, which could dash hope of an early BoC shift to easing.
The German government has raised its economic growth forecast for this year to 0.4% from a previously predicted 0.2%, in marked contrast to the downward revision to growth for 2023 by the Fed.
Driving the dollar versus major currencies are early signs of a U.S. slowdown and decelerating inflation that will be greater than other economies, said Thierry Wizman, global FX & interest rates strategist at Macquarie in New York.
Oil prices steadied on Friday, set for a weekly loss, as the Fed and ECB's cautious stance fueled global economic concerns.
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