Home Business Crude Ascends Above $96 per Barrel as US Stockpiles Remain Worrisome

Crude Ascends Above $96 per Barrel as US Stockpiles Remain Worrisome

Crude Ascends Above $96 per Barrel as US Stockpiles Remain Worrisome

Oil prices reached a 10-month high, surging nearly 3% and approaching $100 a barrel. This increase came as US stockpiles were lower than expected, adding to concerns about the impact of tighter global supplies of crude oil. Brent crude, the international benchmark, climbed to $97.06 a barrel, its highest level since November 2022. The Energy Information Administration’s latest report revealed a decrease in US commercial crude oil inventories and a drop in inventories at the delivery point for West Texas Intermediate. Oil prices have already risen 30% since June due to supply cuts announced by some of the world’s largest fossil fuel producers. This spike in oil prices has raised concerns about persistent inflation in the US and Europe.

As a result of the spike in oil prices and concerns over persistent inflation, equity markets were under pressure. The US S&P 500 fell 0.4%, reaching a three-month low, while the Nasdaq Composite experienced a 0.3% decline. In Europe, the Stoxx Europe 600 index also finished 0.2% lower, marking its fifth consecutive day of losses. Additionally, US government bond yields continued their sharp sell-off, with the benchmark 10-year Treasury reaching a fresh post-2007 high. This, coupled with the acceptance that interest rates will stay higher for longer, has led to a decline in the appeal of equities among investors. As a result, bonds are becoming increasingly attractive compared to equities.

In terms of other economic indicators, US durable goods orders showed improvement, rising 0.2% in August after a 5.6% contraction in the previous month. This was better than the 0.5% fall forecasted by economists. Furthermore, the dollar strengthened by 0.4% against a basket of six peer currencies, reaching a 10-month high. Market attention is now focused on upcoming US and eurozone inflation data, which will provide insight into future monetary policy decisions. In China, industrial sector profits showed signs of stabilization, with a smaller contraction of 11.7% in the first eight months of 2023 compared to a 15.5% contraction in the first seven months of the year. The Hang Seng index in Hong Kong rose 0.8%, while China’s CSI advanced 0.2% after a two-day losing streak.

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