July 20. Oil is moderately cheaper in the middle of the week Oil quotes are moderately declining on Wednesday after yesterday's growth to the highest since the beginning of July. On July 18 Brent was trading near $99.65 per barrel, then on the 20th the asset sharply strengthened to $107.60. The current quote is $105.57 per barrel. North American WTI oil shows similar dynamics: a decline to $98.94 per barrel after rising to a maximum of $100.55. The current WTI quote is $99.10 per barrel. Fears that the actions of the US administration to combat climate change will negatively affect oil production in the country contributed to the growth of both assets. Yesterday, US President Joe Biden promised to take decisive measures on the part of the executive branch in order to combat climate change and support renewable energy. However, the president did not specify the details, which caused a wave of concerns among market participants. Previously, the environmental measures of the authorities included reducing the area of territories adapted for oil and gas production. Today, yesterday's data from the American Petroleum Institute put pressure on Brent and WTI. The report showed that the growth of crude oil reserves in the United States last week amounted to 1.5 million barrels, which was higher than the projected 400 thousand barrels. Today, we should pay attention to similar statistics from the US Department of Energy – if official data confirm the growth of hydrocarbon reserves, oil quotes will continue to decline.
July 21. The ECB raised the rate by 50 bps at once for the first time in 11 years During today's meeting of the European Central Bank, a historic decision was made – for the first time in 11 years, the regulator raised the base interest rate by 50 basis points at once: from 0% to 0.5%. The deposit rate was increased to zero (from minus 0.5%), the rate on short-term loans was increased to 0.75%. Thus, the regulator intends to fight record inflation, the level of which was 8.6% in June. A further increase in the ECB's key rate is expected in September. Here you can see the European central bank following the global trend: the Bank of England, for example, has already raised its interest rate 6 times over the past six months. And the key rate of the US Federal Reserve System may reach 3.5% by the end of the year. At the same time, the ECB understands that a change in the course of monetary policy is associated with the risk of recession against the background of the war in Ukraine. Additional pressure on the European economy is exerted by the government crisis in Italy: the resignation of Mario Draghi, who previously headed the ECB, led to a drop in the main index of the Milan Stock Exchange. Moreover, due to political uncertainty, the cost of servicing Italy's national debt will increase.
July 26. Gas prices in Europe jumped above $1,900 According to the London ICE exchange, gas prices in Europe are rising moderately on Tuesday and are holding above $1,900 per thousand cubic meters. The cost of «blue fuel» jumped sharply yesterday after Gazprom announced plans to reduce supplies via the key Nord Stream gas pipeline from Russia to Europe. According to the plan, from June 27, the pipeline will pass no more than 33 million cubic meters per day, which is only 20% of the nominal capacity of the main line. Analysts believe that exchange prices for gas in Europe may exceed $2,000 per thousand cubic meters for the first time in four months. The last time the cost of gas exceeded this mark was in early March – then gas quotes approached the $4,000 mark due to fears of a ban on Russian energy resources. The estimated gas price on the European stock exchange in July averages $1,742 per thousand cubic meters. This is several times higher than in the same period last year. Experts note that there have not been such consistently high prices in the entire history of the operation of gas hubs in Europe – since 1996. July 25. Brent fell below $98 per barrel World oil prices continue the decline, which began at the end of last week. The current Brent quote is $97.66 per barrel. Pressure on the commodity asset is exerted by traders' concerns about the prospects for economic growth and demand for energy resources in the world in conditions of high economic uncertainty. The fact is that the world's central banks are aimed at curbing the acceleration of inflation, which can lead to a recession. The focus of the markets in the last trading week of July is the meeting of the US Federal Reserve System, which is likely to be another reminder of the economic difficulties in the country and in the world. The results of the meeting will be published on Wednesday, and most analysts expect another rate hike by 75 basis points, to 2.25-2.5%. As for demand, analysts believe that oil demand may exceed expectations even in the event of a weakening of the US economy. The fact is that consumption growth in recent years has lagged behind the average level for 40 years due to coronavirus restrictions and should return to normal levels. In general, despite the local decline, the oil market is likely to continue to grow in the coming weeks, given the beginning of the hurricane season, which may limit production in the Gulf of Mexico. And this traditionally pushes oil prices up.
July 27. The yuan came under pressure amid problems in the Chinese housing market On Wednesday, the Chinese yuan showed a decline against the background of weak demand for loans, which led to a reduction in REPO rates. Today it became known that short-term REPO rates on the continental market fell below 1% for the first time since January 2021 under the pressure of excessive liquidity and restrained demand for loans. Analysts note that with very low real interest rates in China, it is possible that the Chinese economy falls into a liquidity trap. And to maintain its growth, additional fiscal stimulus and loosening of the regulation of the real estate market may be required. The traditional easing of monetary policy now is not expected to effectively support economic growth. Before the market opened, the People's Bank of China set the median rate at 6.7731 yuan per US dollar against 6.7483 yuan on Tuesday. Additional pressure on the Chinese currency is exerted by the expectation of the outcome of the US Federal Reserve meeting and the rate decision. Investors are also waiting for a telephone conversation between Chinese Leader Xi Jinping and US President Joe Biden scheduled for Thursday. It is also worth paying attention to the statistics released today: in June, the profit growth of manufacturing companies in China resumed and amounted to 0.8% compared to June last year. In May, the indicator decreased by 6.5%.
August 8. The oil market remains under pressure Yesterday, oil prices again showed a decline in the area of multi-month lows – to the level of $93.20 per barrel. Today, Brent crude managed to recover to the level of $94.25. Pressure on the oil market continues to be exerted by investors' fears that rising interest rates and a slowdown in the global economic recovery will have a significant negative impact on demand. The worries of market participants intensified yesterday after the Bank of England decided to raise the base interest rate to 1.75% from 1.25% per annum, at a record pace since 1995. At the same time, the British regulator noted that it expects a decline in the UK economy in the fourth quarter of 2022, and this decline will last throughout 2023. However, a number of analysts believe that it is too early to say that the world economy is in recession. Moreover, sharp fluctuations in the oil market due to the current global economic conditions make it difficult to forecast a deficit or surplus of production for 2022. On August 3, OPEC+ decided to increase oil production in September by 100,000 barrels per day, and this decision is aimed at studying the market reaction and may be revised.
August 9. Oil prices rise on news of limited supplies to Europe The oil market continues to show an upswing that began during yesterday's trading session. The quotes were supported by the news that Ukraine suspended the pumping of oil from Russia to Hungary, the Czech Republic and Slovakia. The price of Brent rose from $93.20 per barrel to $98.30 during the day. The current quote of the asset is $97.66 per barrel. WTI grade oil shows similar dynamics: the asset rose from the level of $87.40 to $92.60. The current quote of North American oil is $91.60 per barrel. The news about the restriction of Russian oil supplies to Europe against the background of the ongoing energy crisis provides significant support to oil prices. Back on August 4, the Ukrainian national company Ukrtransnafta stopped pumping Russian oil through the southern branch of the Druzhba oil pipeline system, since the Russian side cannot make a payment for transit under EU sanctions. Additional support for oil prices is provided by the depreciation of the US dollar against world currencies. The dollar index declined by 0.37% to 106.04 points.
August 10. Crypto market news Bitcoin has sharply increased in price by $1.000 and exceeded the level of $24.000 after the release of inflation data in the United States. The current BTC quote is $24.077, over the past day the cryptocurrency has risen in price by 3%. The cost of bitcoin increased after the US Department of Labor reported an increase in consumer prices in the country by 8.5% year-on-year in July. The Coinbase crypto exchange recorded a loss of $1.1 billion in the second quarter. This became known from the company's financial report. Coinbase has suffered due to a sharp decline in trading volumes caused by the collapse of cryptocurrency quotes in recent months. In particular, the price of bitcoin has dropped by almost 70% from the historical maximum set in November 2021. The developers of the Phantom cryptocurrency service announced the results of an investigation into the hacking of 9230 Solana wallets and the theft of $4.08 million in cryptocurrency that occurred on August 3. The representatives of the project found out that all the affected addresses were related to the Slope mobile application – they were created, imported or used in it. Further investigation is ongoing. In China, more than 12 thousand accounts in local social networks were blocked, the owners of which promoted and advertised the cryptocurrency. Also, Chinese web platforms have deleted more than 51 thousand posts with illegal advertising of earnings through investing in bitcoin. The Robinhood cryptocurrency service, by court decision, will pay compensation totaling $9.9 million to all users affected by platform outages in 2020. Then the blocking of traders' operations led to significant losses, as at the same time the financial markets showed record growth results.
August 11. US stock exchanges continue to rally The main US stock indexes opened trading on Thursday with growth, continuing to follow the dynamics of the previous day. The market was supported by data indicating a slowdown in inflation in the United States. In particular, the Dow Jones Industrial Index (DJIA) rose by 0.79% to 3,3571.43 points, the NASDAQ index of high-tech companies – by 0.98% to 1,2981.20 points, the S&P 500 broad market index – by 0.88% to 4,247.12 points. Yesterday, the US Department of Labor reported that annual inflation in the country slowed down more than expected by the end of July – from 9.1% to 8.5%. On a monthly basis, consumer prices did not change, while analysts expected them to grow by 0.2%. Market participants expect that the slowdown in inflation will force the US Federal Reserve System to begin easing monetary policy. According to the survey, 63.5% of analysts expect the regulator to raise its base rate by 50 basis points, although earlier the markets predicted a third increase in a row by 75 bp. Investors also paid attention to the data on applications for unemployment benefits. Their number has grown to 262 thousand, while analysts expected an increase to 263 thousand. The indicator of the previous week was revised from 260 thousand to 248 thousand applications.
August 15. The European market is growing at the beginning of the week European stock indexes are growing moderately at the beginning of a new trading week. And investors continue to analyze weak statistics on the Chinese economy. The German DAX index is trading near the values of the previous session (13.786,72). The CAC 40 in France rose 0.2% to 6,533.12 points, and the British FTSE 100 was trading 0.2% higher than the previous close at 7,539.65. Economic data from China showed that the pace of economic growth in the country unexpectedly slowed in July, which forced the central bank of China to reduce the key lending rate from 3.70% to 2.75%. Industrial production in July increased by 3.8% compared to a year earlier, but the growth rate was lower than the expected 4.6%. Retail sales increased by 2.7% compared to a year earlier, while failing to meet forecasts of 5.0% growth and 3.1% growth observed in June. In Europe, the European Central Bank raised interest rates by half a point in July and is expected to do the same in September. The tightening of the ECB's monetary policy comes despite the fact that the risk of recession in the eurozone has reached its highest level since November 2020. And all because of record inflation against the background of a shortage of energy carriers. Corporate news of European companies Shares of AstraZeneca PLC rose 2.6% after the drugmaker announced that its anti-cancer drug Enhertu slowed the progression of a form of breast cancer in previously treated patients. Shares of Henkel AG & Co. Stocks rose 0.4% after the German consumer goods company reported that its sales volume increased in the first half of the year, but profits declined due to rising prices for raw materials and logistics.
