Headlines:
Markets:
- WTI crude oil up 12.7% to $102.62, Brent crude oil up 12.4% to $104.58
- US dollar up across the board but off early highs
- CAD leads, EUR lags on the day
- European stocks sold heavily once again, S&P 500 futures down 1.2%
- 10-year Treasury yields up 4 bps to 4.17%
- Gold down 1.6% to $1,083, Silver down 1.3% to $83.25
- Bitcoin up 2.3% to $67,490
The main story is in the oil market as prices surged higher once again after the weekend. At one point, crude oil was looking poised for its largest one-day gain ever with WTI crude running hot at around $116 at the tail end of Asia trading.
It took a timely “leak” by the G7 ahead of the meeting between finance ministers later today, in saying that they will coordinate with the IEA to release emergency oil reserves to the market. That brought about some instant relief but all it has done is just take oil prices off the boil. The temperature in the room is still raised and relatively hot.
WTI crude oil dropped from $116 to $102 but is still seen consolidating around $103 to $106 after. The key threshold to watch is to keep above the $100 mark. That will continue to signal that traders are not convinced by the G7 and IEA narrative, even with the release this time around set to eclipse that seen in 2022.
Unless the situation in the Middle East cools, it will be tough to imagine this being nothing but a plaster to plug the hole on the dam. That especially since it will take weeks for the energy disruption to correct itself in the region and also the crude oil supply here will also take weeks before reaching refineries and being made for use. In the meantime, expect prices at the pump to stay higher until the situation changes.
In other markets, the dollar is also bid across the board again but off earlier highs. EUR/USD fell to a low of 1.1507 earlier in the day as higher gas prices continue to weigh at the European economy, before recovering to around 1.1560 now – still down 0.5% on the day.
Meanwhile, USD/JPY is up 0.4% to 158.45 but the high hit 158.90 earlier as we continue to hover near intervention territory. The loonie is the exception as the currency is booster by higher oil prices with USD/CAD down 0.2% to 1.3537.
In the equities space, stocks continue to be hammered lower in Europe but at least it is off opening lows. The losses were over 2% in the opening hour but that is cooling a little on the day at least. Still, it’s been a tough six trading days for European indices in wiping out the gains for the year. The DAX is down 1.6% and CAC 40 down 1.9% today currently.
Elsewhere, precious metals are also seeing volatile trade still as the push and pull continues. At the balance, gold is keeping lower with price down 1.6% to $5,083 and silver down 1.3% to $83.25 currently. As for the bond market, inflation fears continue to trump safety flows as Treasury yields continue to ramp higher to start the new week. 10-year yields are up another 4 bps to 4.17% currently with the earlier high touching 4.21%.
It’s all on watching for the G7 finance ministers meeting later at 1230 GMT next.
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