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According to the Russian news agency, citing the Ministry of Defense, the Russian military shot down 354 drones overnight.On June 3rd, Citigroup issued a report stating that Tencent (00700.HK) has reportedly begun testing its AI agent prototype on the WeChat application. Given Tongcheng Travels (00780.HK) "all-around WeChat" strategy, the sophisticated and comprehensive features of its mini-programs, its relationship with Tencent, and its status as the only online travel agency (OTA) service provider within WeChat Wallet, Citigroup believes that if Tencent launches an AI agent on WeChat, Tongcheng Travel will be one of the beneficiaries of the WeChat ecosystem. Tongcheng Travels share price has been under pressure due to the valuation downgrade of vertical industry leader Ctrip Group (09961.HK) and the impact of rising oil prices on domestic tourism demand, but its current valuation corresponds to a forward P/E ratio of less than 8 times for 2026, which Citigroup considers not expensive. Citigroup maintains its "Buy" rating on Tongcheng Travel with a target price of HK$25.Futures News, June 3rd - Data released by the Petroleum Institute of Japan (PAJ) on Wednesday showed that for the week ending May 30th, Japans commercial crude oil inventories stood at 10.0167 million kiloliters, an increase of 537,049 kiloliters from the previous weeks 9.4797 million kiloliters. Refinery operational capacity (BPSD) utilization was 79.1%, compared to 82.1% the previous week. Refinery design capacity (BPCD) utilization was 63.1%, compared to 73.5% the previous week. Due to changes in Japans petroleum product supply structure, the PAJ has suspended the release of weekly inventory details for gasoline, jet fuel, kerosene, and diesel.June 3rd - According to the Financial Times, European Central Bank (ECB) Governing Council member Winsch stated that a peace agreement between the US and Iran reached before next weeks ECB meeting would not weaken the case for an interest rate hike. Winsch said, "If a peace agreement is indeed reached before the meeting, it will be part of the discussion. But we cannot know whether it will be lasting or credible." He hinted at support for a 25 basis point rate hike by the ECB. He believes that if the conflict remains unresolved, discussions among policymakers before setting interest rates on June 11th will be "quite easy." If a peace agreement is reached between the US and Iran, the discussions "may be slightly less easy. But the case for a rate hike may still exist, just not as strongly." He stated, "At some point, we cannot let the markets bear everything. We need to make a position clear."Market news: Humanoid robot company Pacini is reportedly considering a Hong Kong IPO.

WTI crude oil climbs above $80.00 as NFP and recession fears contend with an OPEC+ surprise

Daniel Rogers

Apr 07, 2023 11:36

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As energy markets celebrate the Good Friday holiday, WTI crude oil prices remain stable around $80.50, poised for a three-week uptrend. In doing so, black gold defends the week-beginning gains provided by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, headed by Russia, known as OPEC+, who announced a surprise output cut. However, concerns of a recession and a cautious disposition ahead of the March US employment report have recently posed a challenge to the energy benchmark.

 

The OPEC+ group startled the market with a voluntary output decline of nearly 1.66 million barrels per day. The International Energy Agency (IEA) stated, in response to the OPEC+ announcements, that the OPEC+ decision to reduce oil output risks aggravating a stressed market by driving up oil prices in response to inflationary pressures.

 

On the other hand, the US Dollar's weakness, bolstered by disappointing US data, supported the recovery of the black gold.

 

In spite of this, the US Dollar Index (DXY) has a four-day losing streak and is currently trading around 102.000.

 

Initial Jobless Claims for the week ending March 31 increased to 228K from 200K expected and an upwardly revised 246K the previous week. Notable is that the Challenger Job Cuts for the given month increased from 77,77K to 89,703K. Previously, US JOLTS Job Openings fell to a 19-month low in February, and March's ADP Employment Change figures of 145K also disappointed markets. In addition, the US ISM Services PMI for March decreased to 51.2 compared to 54.5 anticipated and 55.1 previously.

 

China's optimism for economic development and optimistic activity data from the dragon nation could also support the oil price. Pan Gongsheng, the director of China's State Administration of Foreign Exchange (SAFE), stated on Friday that Beijing "will defend itself against external financial market shocks and risks."

 

It should be noted, however, that recent calls for a recession pose a challenge to WTI crude oil purchasers, and more signs of economic decline should be monitored for direction, particularly when commodity prices trade near the key short-term resistance line.

 

In addition to the news about the recession, the March US employment report will be crucial to monitor for direction. Analysts anticipate a decline in headline Nonfarm Payrolls (NFP) to 240K from 311K previously, with the unemployment rate remaining unchanged at 3.6%. However, the contradictory forecasts for Average Hourly Wages make the outcome even more intriguing.


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