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On June 11, following Trumps remarks about possible further attacks on Iran, Ibrahim Aziz, head of the Iranian Parliaments National Security Committee, posted a strong statement on social media. He stated, "We are not afraid to fight the losers. American casualties are already far higher than Trump has admitted, and will continue to rise. This time, the war will not be confined to this region. We will wait and see!"On June 11, the U.S. Department of Energy announced on Wednesday that the United States is seeking to lend up to 40 million barrels of its Strategic Petroleum Reserve (SPR) to energy companies to help lower fuel prices. This plan is part of a previous agreement to release 172 million barrels of SPR. To date, the U.S. has lent approximately 133 million barrels of crude oil under that agreement. In March of this year, following the U.S. and Israels war against Iran on February 28, the U.S. reached an agreement with approximately 30 member countries of the International Energy Agency to release approximately 400 million barrels of strategic reserves to help stabilize the international oil market. Currently, U.S. SPR inventories stand at 349.2 million barrels, the lowest level since August 2023. Companies that borrow crude oil must return an equivalent amount of crude oil and pay a premium of up to 24% in the form of additional crude oil.The Nasdaq fell as much as 2% in late trading, the Dow Jones Industrial Average dropped 1.6%, and the S&P 500 fell 1.5%.According to the Financial Times, the EU plans to continue providing free carbon emission allowances to businesses into the 2040s, eliminating the current 2039 deadline.According to the Financial Times, the EU plans to provide protection for relevant industries in the future, shielding them from future carbon costs, provided that these companies invest within the EU.

WTI crude oil drifts above $80.00 amidst a US Dollar rebound and supply shortage concerns

Alina Haynes

Apr 10, 2023 14:16

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In the early hours of Monday, purchasers of WTI crude oil struggled to maintain the price above $80.70 as risk aversion and hawkish Fed forecasts bolstered the US Dollar. However, threats to Oil supplies, primarily emanating from China and OPEC+, appear to keep purchasers of black gold optimistic.

 

US Dollar Index (DXY) reverses a four-day downtrend near 102.25 despite the inability of US Treasury bond yields to recover due to recession concerns. However, US 10-year and 2-year Treasury bond yields remain under pressure near 3.37 percent and 3.95 percent, respectively. In doing so, the benchmark bond coupons extend the previous day's losses and illustrate the market's flight to protection in response to concerns of an economic decline.

 

In spite of this, the recent disappointing US data reignite concerns of a recession in the world's largest economy and challenge the optimists in the energy sector. However, the positive US Nonfarm Payrolls (NFP) data enabled Fed hawks to return to the table and renew demands for a 0.25 percentage point rate hike in May. The same constrains the value of the US dollar and stimulates demand for WTI crude oil.

 

On the other hand, geopolitical concerns surrounding China, particularly after the dragon nation's military exercises near Taiwan, combine with last week's unexpected OPEC+ production cut to keep Oil purchasers optimistic.

 

China's willingness to defend the global economy through robust monetary and fiscal easing at home also enables Oil purchasers to maintain optimism in the face of optimism among the world's largest Oil consumers.

 

The Easter Monday holiday in spot markets may limit Oil price movements, but the investors appear to be out of steam, so US inflation and Fed Minutes will be closely monitored for signs of a pullback.


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