Oil is rising again and the Tokyo index is in the green zone
Oil is rising again and the Tokyo index is in the green zone
Oil is rising again and the Tokyo index is in the green zone: Oil has shifted upward today
after it had suffered heavy losses yesterday, as morale has been affected by the progress
of the Iranian-American talks as well as the recent increase in oil inventories in addition to the chances that demand will retreat again due to the accelerated spread of the Covid-19 virus in India.
In the following lines, Evest is discussing all that happens in financial markets.
Oil turns up after the sharp drop yesterday
Oil prices are back up today, after falling by nearly 5% yesterday on the back of data on an increase in US crude inventories and owing to the growing concerns about retreating demand amid growing Coronavirus infections in Asia.
The July futures for Brent crude oil in London Futures Exchange rose to $66.88 a barrel,
$0.22 (0.33%) above the closing price of the previous session.
The price of West Texas Intermediate crude oil futures for June in electronic trading in the New York Mercantile Exchange was $63.61 a barrel, $0.25 (0.39%) higher than the final value of the previous cycle.
United States Department of Energy
According to the United States Department of Energy,
the country’s oil inventories for the week ending on May 14 rose by 1.32 million barrels.
Experts expected inventories to be declined by an average of 2.9 million barrels.
Inventories at Cushing Station, Oklahoma, as oil is being stored on the New York Stock Exchange,
declined by 100,000 barrels this week.
Gasoline inventories in the United States decreased by 1.96 million barrels, while distillation products fell by 2.32 million barrels.
On average, analysts expected gasoline inventories to increase by 600,000 barrels.
Turbulence in the oil market is also escalating with the deteriorating epidemiological situation in parts of Asia.
The poor epidemiological situation in Asia affects the pressure on oil prices that have been suffering since the beginning of the crisis almost a year and a half ago.
Although they have been able to return to pre-epidemic levels, the situation also remains volatile.
Nearly two-thirds of people tested in India show a readiness to be infected by Coronavirus.
This indicates the rapid spread of the virus.
On the other hand, the daily number of deaths due to the epidemic has risen to a record of 4529 people in the county.
This week’s price drop gained more momentum after the media reported progress in the US-Iran nuclear talks.
This by its turn could lead to the lifting of sanctions against the Iranian oil and gas industry as well as an increase in the supply of black gold on the world markets.
However, it was subsequently announced that it would take longer to reach an agreement.
Oil prices decreased
Oil prices decreased sharply yesterday due to an increase in the number of new cases of Covid-19 infections in Asian countries, particularly in India, and fears that the normalization of monetary policy of the United States Federal Reserve Board could slow economic growth.
The downward trend was driven by the generally poor mood in financial markets.
Crude oil is a risky asset class that causes declining stock prices.
The rise of the dollar
The rise of the dollar created an additional burden.
The latest text of the Fed’s interest rate meeting shows that some central bankers want to talk about a less generous monetary policy if the economic recovery continues.
The rising of the dollar price makes oil more expensive for investors outside the dollar zone and it also affects demand there.
Today, oil prices which have somewhat risen due to the response of investors wishing
to benefit from the lower prices, are following a mixed path as the United States commercial
crude oil inventories, the world’s largest oil consumer, increase below market expectations
and gasoline inventories decline.
With the resumption of the oil pipeline in Colonial, which has been exposed to an electronic attack, gasoline inventories have fallen by nearly 2 million barrels more than expected in the mentioned period.
Inventories were expected to decline by about 900,000 barrels.
Despite the easing of the restrictions of the spread of Covid-19 virus
in the United States of America and the European Union, fears that oil demand
will continue to decrease in Asian countries, as new procedures have been announced owing
to an increase in the number of cases of infections and the failure of vaccinations efforts to reach the expected speed remain the most important pressures on prices.
Nikkei rises slightly
Tokyo Stock Exchange closed slightly higher today after assessments of a possible tightening of monetary policy than expected were hesitated in the United States earlier in the morning.
Eventually, the Leading Nikkei index rose by 0.19% to reach 28,098.25 points, while the broader Topix index somewhat stagnated, rising by 0.04% to record 1,895.92 points.
As happened in Wall Street the day before, investors analyzed the minutes of the US Federal Reserve Board meeting which was published yesterday.
This report of the Fed’s discussions at its last monetary meeting
at the end of April showed that there had already been an internal debate about
an imminent possible reduction in its support for the American economy, through adjustment of assets buybacks.
This is a scenario that markets fear.
However, this monetary tightening in the United States can also have good aspects for Japanese stocks, by causing the dollar to rise against the Yen.
Japanese exports increased sharply during April
over a one-year period (+38%), this is an extraordinary increase above expectations
but it is largely linked to the collapse of international trade
in the spring of 2020 due to the Covid-19 epidemic.
In China, the Hong Kong Stock Exchange’s Hang Seng Index decreased by 0.48% at the end of the session,
while the composite indicators of Shanghai and Shenzhen were moving in the green zone.
While Covid-19 vaccines from the American Modern and the British AstraZeneca
must get the regulatory green light in Japan today, these groups’ partners in the county faced
varying stock market fortunes in the financial markets.
Takeda, the Japanese partner of Moderna company,
fell by 0.18% to record 3761 yen, while Daiichi Sankyo (associated with AstraZeneca)
rose by 0.11% to reach 2626.5 yen.
Oil is rising again