Consequently, the pressure increased in the Asia Session on the price of crude oil. The American Petroleum Institute (API) released a report the day before that revealed a 2.165 million bbl increase in US crude oil stockpiles.
At its meeting on Wednesday, the Organization of Petroleum Exporting Countries (OPEC+) increased September’s supply by a pitiful 100,000 bbl.
They emphasized the limitation of available capacity. Market view holds that even with their best intentions, they would not be able to significantly increase production.
Another enormous trade surplus of the Australian Dollar 17.67 billion for June gave the Australian dollar a lift. This exceeded the Australian Dollar 14 billion predictions and the Australian Dollar 15 billion surplus from three months ago.
Neel Kashkari, president of the Minneapolis Federal Reserve, emphasized earlier in the US session that there is no indicated shift from the FOMC meeting in the week before.
James Bullard, president of the St. Louis Federal Reserve, confirmed what he had said before, saying that he expected the Fed funds rate to be between 3.75% – 4.0% by the end of 2022.
Remarks from Richmond’s Thomas Barkin and San Francisco’s Mary Daly helped to temper the hawkish tone. If everything they are suggesting is to be believed, a Fed hike halt is not likely to occur, at least not right now. The rates market and the USD in the beginning of the week mirror this viewpoint. Bonds with high yields and equity markets are trading in the reverse.
Prior to the Bank of England’s (BoE) rate decision, the pound scarcely changed on Thursday. They are expected to increase to 1.75 % by 50 bps. The market will pay close attention to any news on future significant Gilt sales. The BoE’s rate decision will be followed by initial unemployment claims and trade data for the US.
Backwardation has significantly decreased during the past few days. It happens when the contract that is closing in on settling is pricier than the contract closing following that initial contract.
It demonstrates the market’s readiness to spend extra for immediate delivery as opposed to delayed delivery. Lower pricing might be possible as backwardation returns to ranges prior to the beginning of the Russia-Ukraine war.