Oil losses and collective declines in Europe and Japan

Oil losses and collective declines in Europe and Japan: Oil was unable to continue the upswing, crashing into the press conference after the Fed meeting,
which had a positive impact on the dollar, and negatively on oil in the commodity trading market.

In the following lines, Evest will show you all this and more.

Oil bucks this trend of gains and declines due to the strength of the dollar

Benchmark oil prices fell today, Thursday, against the backdrop of a rise in the U.S. dollar
after the two-day meeting of the United States Federal Reserve (FRS).

Oil prices on the New York Fuel Exchange are falling in response to signals from the United States Federal Reserve
that they are moving towards tightening monetary policy, according to experts.

The West Texas Intermediate barrel

The West Texas Intermediate barrel for July delivery on the New York Fuel Exchange
is estimated at $71.94, down 0.29 per cent.

While the cost of Brent crude for August delivery on the European Fuel Exchange in London is $74.15 a barrel, down 0.32%.

On Wednesday, the Federal Reserve kept the major interest rate in the United States within a range of 0-0.25٪.

Fed projections show that 7 Committee members expect interest rate hikes.

In 2022, 13 out of 18 members of the Federal Open Market Commission expect at least one rate hike through 2023.

In its statement, the Fed indicated that it aims to “maximize employment and inflation by 2% over the long term.”

Federal Reserve Chairman Jerome Powell

Federal Reserve Chairman Jerome Powell indicated that he would be able to say more about the timing
of the asset procurement program cutback when he sees more data, and added that inflation would remain high in the coming period.

Following these comments, the US dollar rose, making U.S. dollar-priced commodities, including crude oil, less attractive to investors in other currencies.

U.S. crude oil inventories

In the meantime, U.S. crude oil inventories declined last week by 7.35 million barrels, or 1.6%.

Gasoline inventories increased by 1.95 million barrels during that period, or 0.8 per cent, to 243 million barrels,
and distilled fuel reserves, including heating oil, fell by 1.02 million barrels, or 0.7 per cent, to 136.2 million barrels, according to the Ministry of Energy.

Analysts say oil markets continue to show signs of strength as the COVID-19 pandemic begins to recede.

Potential Fed actions are likely to have a greater impact on commodities other than oil.

Oil prices have risen this year and West Texas Intermediate crude reached its highest level since 2018 earlier this week,
as the spread of coronavirus vaccines paves the way for lifting restrictions imposed in many countries while fighting the pandemic.

What happened in Jerome Powell’s speech?

What happened in Jerome Powell’s speech?

Jerome Powell, Chairman of the Federal Reserve Board, showed tightening in his speech.

This was not included in the statement but was stated in the subsequent press conference.

Powell indicated, for the first time, that if the economic recovery continued to be favorable,
the discussion would be opened at future meetings, but they would give advance notice.

The market interprets that the tapering will be announced at the August meeting and will come into effect in January.

The Federal Reserve

The Federal Reserve keeps interest rates between 0% and 0.25% and advocates accommodative policy.

It also conducted an upward revision of US GDP + 0.5%, up to 7% in 2021,
keeping 2022 unchanged while in terms of core inflation 2021 + 0.8%, up to 3%.

Janet Yellen is scheduled to appear today in a talk at 4:00 p.m.

Markets are also looking forward to the Eurogroup meeting, which will start at 12:00.

Yesterday, in a meeting between Joe Biden and Vladimir Putin, it was agreed on the return of the ambassadors of the two countries,
at a time of tension between the two forces.

The impact of the speech on Wall Street trading yesterday

Declines were seen on Wall Street, the Dow Jones index lost 0.77% to 34033.67 points, the Standard & Poor’s 500 indexes fell by 0.54% to 4223.70 points,
and the Nasdaq index declined by 0.24% to 14039.68 points.

The most affected sectors are basic materials, utilities, and defense consumption.

Nikkei declines by profit-making operations

The Tokyo Stock Exchange closed lower on Thursday, with profits dominated by the U.S. Federal Reserve raising inflation expectations in the United States,
which, however, do not intend to raise prices before 2023.

The main Nikkei index lost 0.93% to 29018.33 points, and the extended Topix index closed down 0.62% to 1963.57 points.

However, the yen’s decline against the dollar, a favorable exchange rate movement for Japanese exporting stocks, limited the damage somewhat.

While raising its inflation forecast, the Federal Reserve reiterated on Wednesday
that the acceleration of price hikes in the United States was temporary.

The majority of its members now believe that major interest rates should be raised twice during 2023.

Japan

In Japan, the government would announce later on Thursday that a health emergency
would be lifted as planned after Sunday in several departments,
including Tokyo, which will host the Olympic Games in just over a month.

However, restrictions on bars and restaurants will continue to be applied,
with the Minister responsible for managing the health crisis warning against opening them completely.

In Hong Kong, the Hang Seng Index was near equilibrium, rising by 0.09%,
the Shanghai Composite Index closed slightly higher and the Shenzhen Index also rebounded after falling the previous day.

Collective loss in European markets

In Europe, the major indicators are down, with Ibex down 0.35%, Dax down 0.38%, and Eurostoxx down 0.48%. 

Oil losses and collective declines