Oil settles up 2% on more positive signs

2023-05-18
Summary:

Wall Street rallied to a higher close on Wednesday and the dollar touched a six-week high as regional banks surged and negotiations in Washington over raising the debt ceiling progressed.

Wall Street rallied to a higher close on Wednesday and the dollar touched a six-week high as regional banks surged and negotiations in Washington over raising the debt ceiling progressed.


All three major U.S. stock indexes rallied to end up more than 1%. Oil prices settled up about $2 as optimism over oil demand.


Despite gold extended its loss after its first tumble below $2,000 in two weeks, the yellow metal steered clear of breaking the $1,975 support.


Commodities

The optimism outweighed a crude inventory increase of 5 million barrels in the week ended May 12 reported by the EIA Analysts polled by Reuters had expected a 900,000 barrel drop.

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However, gasoline stocks drew down by 1.4 million barrels as the four-week gasoline product supplied rose to its highest level since December 2021.


In China, April industrial output and retail sales growth undershot forecasts, suggesting the economy lost momentum at the beginning of the second quarter.


Forex

The dollar index climbed as high as 103.12, its strongest level since late March, while the euro dropped to a six-week low versus the dollar at $1.0811. The Swiss franc and the yen also pulled back as traders shrug off economic headwinds.


U.S. data has been on the whole positive, despite some pockets of slowdown, backing the view that interest rates will remain higher for longer.

The rate futures market has priced in no chance of a Fed rate cut in June, down from about a 17% probability seen a month ago.


Wednesday's data showed U.S. single-family building permits rose 3.1% to a seasonally adjusted annual rate of 855,000 units last month, the highest level since last September.

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