Oil gains as U.S. and China data signal robust demand
2023-06-08
Summary:
Global stocks retreated from a 13-month high on Wednesday and the U.S. dollar drifted lower as attention turned towards the next Fed meeting.
Global stocks retreated from a 13-month high on Wednesday and the U.S. dollar drifted lower as attention turned towards the next Fed meeting.
Oil prices climbed about 1% as investors weigh Saudi Arabia’s plans for deep output cuts again. Gold retreated on rising Treasury yields.
Commodities
U.S. crude stocks fell by about 450,000, according to data from the EIA, compared with estimates for a 1 million build.
Oil gained more strength from data that showed that crude oil imports into China, the world's largest oil importer, rose to their third-highest monthly level in May as refiners built up inventories.
A JP Morgan note said forward crude cover in the country has climbed, indicating refiners have not increased processing rates but are instead storing oil.
Global economic growth will pick up only moderately over the next year as the full effects of central bank rate hikes are felt, the OECD said.
Forex
The dollar edged higher against the yen while the Canadian dollar strengthened after the BoC hiked its overnight benchmark rate to 4.75%, the highest level in 22 years.
The Fed is expected to hold rates steady next Wednesday as it evaluates the impact of recent rate increases, though markets are pricing for an additional rate hike in July.
Although the rate hikes by foreign central banks could put pressure on the greenback, the prospect of an additional Fed rate increase in July is likely to limit losses.
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