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Dollar Drops, Asia Shares Jump While Europe Swings

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  • Dollar Drops, Asia Shares Jump While Europe Swings

The dollar sank and Treasuries climbed after the Federal Reserve signaled that inflation remains persistently below its target even as the economy picks up steam. Asian stocks jumped on optimism about corporate earnings, while European equities fluctuated.

The Bloomberg Dollar Spot Index touched the lowest in more than a year, while the 10-year Treasury yield extended losses after the Fed held rates steady and indicated it would start unwinding its balance sheet “relatively soon.” The MSCI Asia Pacific Index reached the highest since December 2007 after earnings from Samsung Electronics Co. and Nintendo Co. beat analysts’ estimates, while the Stoxx Europe 600 Index swung between gains and losses amid results from a load of heavyweight companies.

The Fed said inflation remains below the central bank’s 2 percent target even as near-term risks to the economic outlook appear balanced, signaling it intends to kick off the long-awaited reduction in its $4.5 trillion balance sheet in September and fueling speculation the central bank won’t rush to raise rates.

With the central bank’s announcement out of the way, investors can return to a corporate earnings season that’s seen more than 80 percent of S&P 500 companies deliver higher than-expected profit. Thursday is one of the busiest for Europe, with companies worth more than $3 trillion reporting their accounts.

Deutsche Bank AG, Europe’s largest investment bank, disappointed after reporting a 10 percent decline in second-quarter revenue, while Nestle SA warned that sales growth this year will be the weakest in at least two decades. The outlook was better in Asia, as Samsung Electronics earnings beat analysts’ estimates on the success of its new Galaxy S8 smartphones and surging prices of semiconductors, while Nintendo surprised investors with a big jump in quarterly profit.

Here are the main moves in markets:

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1 percent as of 8:12 a.m. in London, after falling 0.6 percent on Wednesday. The yen traded at 111.24 per dollar, down 0.1 percent after erasing an earlier gain. The South Korean won jumped 0.8 percent.
  • The euro fell 0.1 percent to $1.1723 after a 0.8 percent advance on Wednesday sent the currency to a 30-month high. The British pound rose 0.1 percent after climbing 0.7 percent in the previous session.
  • The Aussie extended gains above 80 U.S. cents, rising 0.4 percent to the highest since May 2015 after jumping 0.9 percent Wednesday. It slid below 79 cents during local trading on Wednesday following weaker-than-expected Australian inflation data and a speech by the nation’s central bank governor.

Stocks

  • The Stoxx Europe 600 was flat. Nestle slumped 1.8 percent and Deutsche Bank lost 2.9 percent. AstraZeneca Plc tumbled 15 percent after the drugmaker suffered a blowto its next-generation cancer therapy.
  • Japan’s Topix index rose 0.4 percent, while Australia’s S&P/ASX 200 Index added 0.2 percent. South Korea’s Kospi index climbed 0.4 percent. In Hong Kong, the Hang Seng Index added 0.8 percent, while the Shanghai Composite Index increased 0.1 percent.
  • The Dow Jones Industrial Average rose above 21,700 for the first time on Wednesday.
  • Futures on the Nasdaq 100 Index climbed 0.6 percent. Facebook Inc. rose 3.4 percent in after-hours U.S. trading after the company reported faster-than-expected sales growth.

Bonds

  • The yield on 10-year Treasuries was at 2.28 percent, down less than one basis point after declining five basis points in the wake of the Fed statement from the previous session.
  • French, German and U.K. 10-year yields lost four basis points.
  • Australian government notes with a similar maturity saw yields fall four basis points to 2.69 percent, erasing Thursday’s gain of four basis points.

Commodities

  • Gold rose 0.1 percent to $1,262.19 an ounce after climbing 0.8 percent in the prior session.
  • West Texas Intermediate crude rose 0.3 percent to $48.91 a barrel, heading for a fourth day of gains.
  • The Bloomberg Commodity Index advanced 0.4 percent, after climbing 0.7 percent on Wednesday.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Nigeria Pumps 236.2 Million Barrels in First Half of 2024

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Nigeria pumped 236.2 million barrels of crude oil in the first half of 2024, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

This figure represents an increase from the 219.5 million barrels produced during the same period in 2023.

In January, Nigeria produced 44.2 million barrels of crude oil while February saw a slight dip to 38.3 million barrels, with March following closely at 38.1 million barrels.

April and May production stood at 38.4 million barrels and 38.8 million barrels, respectively. June’s output remained consistent at 38.3 million barrels, demonstrating a stable production trend.

Despite the overall increase compared to 2023, the 2024 production figures still fall short of the 302.42 million barrels produced in the same period in 2020.

This ongoing fluctuation underscores the challenges facing Nigeria’s oil sector, which has experienced varying production levels over recent years.

On a daily basis, Nigeria’s crude oil production showed some variability. In January, the average daily production peaked at 1.43 million barrels per day (mbpd), the highest within the six-month period.

February’s production dropped to 1.32 mbpd, with a further decrease to 1.23 mbpd in March. April saw a modest increase to 1.28 mbpd, which then fell again to 1.25 mbpd in May. June ended on a positive note with a slight rise to 1.28 mbpd.

The fluctuations in daily production rates have prompted government and industry leaders to address underlying issues.

Mele Kyari, Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), has highlighted the detrimental effects of oil theft and vandalism on Nigeria’s production capabilities.

Kyari emphasized that addressing these security challenges is critical to boosting production and attracting investment.

Kyari also noted recent efforts to combat illegal activities, including the removal of over 5,800 illegal connections from pipelines and dismantling more than 6,000 illegal refineries.

He expressed confidence that these measures, combined with ongoing policy reforms, would support Nigeria’s goal of increasing daily production to two million barrels.

The Nigerian government remains focused on stabilizing and enhancing oil production. With recent efforts showing promising results, there is cautious optimism that Nigeria will achieve its production targets.

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Crude Oil

Oil Prices Steady Amid Mixed Signals on Crude Demand

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Crude oil

Oil prices remained stable on Thursday as investors navigated conflicting signals regarding crude demand.

Brent crude oil, against which Nigerian oil is priced, settled at $85.11 a barrel, edging up by 3 cents, while U.S. West Texas Intermediate (WTI) crude dipped by 3 cents to $82.82 a barrel.

The stability comes as the U.S. economy shows signs of slowing, with unemployment benefit applications rising more than expected.

Initial claims increased by 20,000 to a seasonally adjusted 243,000 for the week ending July 1, prompting speculation that the Federal Reserve might cut interest rates sooner than anticipated. Lower rates could boost spending on oil, creating a bullish outlook for demand.

Fed officials suggested that improved inflation and a balanced labor market might lead to rate cuts, possibly by September.

“Healthy expectations of a Fed rate cut in the not-so-distant future will limit downside,” noted Tamas Varga of oil broker PVM.

However, rising jobless claims signal potential economic easing, which could dampen crude demand.

John Kilduff of Again Capital highlighted the impact of a slowing economy on oil consumption despite a significant drop in U.S. crude inventories last week.

Global factors also weighed on the market. China’s economic policies remain steady, though details are sparse, affecting investor sentiment in the world’s largest crude importer.

Meanwhile, the European Central Bank maintained interest rates, citing persistent inflation.

An upcoming OPEC+ meeting in August is expected to assess market conditions without altering output policy, according to sources. This meeting will serve as a “pulse check” for market health.

Overall, oil prices are caught between economic concerns and hopes of a rate cut, maintaining a delicate balance.

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Crude Oil

Oil Prices Slide on China Demand Concerns, Brent Falls to $83.73

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Crude Oil - Investors King

Oil prices declined on Tuesday for the third consecutive day on growing concerns over a slowing Chinese economy and its impact on global oil demand.

Brent crude oil, against which Nigerian oil is priced, dipped by $1.12, or 1.3% at $83.73 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $1.15, or 1.4%, to close at $80.76.

The dip in oil prices is largely attributed to disappointing economic data from China, the world’s second-largest economy.

Official figures revealed a 4.7% growth in China’s GDP for the April-June period, the slowest since the first quarter of 2023, and below the forecasted 5.1% growth expected in a Reuters poll.

This slowdown was compounded by a protracted property downturn and widespread job insecurity, which have dampened fuel demand and led many Chinese refineries to cut back on production.

“Weaker economic data continues to flow from China as continued government support programs have been disappointing,” said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “Many of China’s refineries are cutting back on weaker fuel demand.”

Despite the bearish sentiment from China, there is a growing consensus among market participants that the U.S. Federal Reserve could begin cutting its key interest rates as soon as September.

This speculation has helped stem the decline in oil prices, as lower interest rates reduce the cost of borrowing, potentially boosting economic activity and oil demand.

Federal Reserve Chair Jerome Powell noted on Monday that the three U.S. inflation readings over the second quarter “add somewhat to confidence” that the pace of price increases is returning to the central bank’s target in a sustainable fashion.

This has led market participants to believe that a turn to interest rate cuts may be imminent.

Also, U.S. crude oil inventories provided a silver lining for the oil market. According to market sources citing American Petroleum Institute figures, U.S. crude oil inventories fell by 4.4 million barrels last week.

This was a much steeper drop than the 33,000 barrels decline that was anticipated, indicating strong domestic demand.

The International Monetary Fund (IMF) also weighed in, suggesting that while the global economy is set for modest growth over the next two years, risks remain.

The IMF noted cooling activity in the U.S., a bottoming-out in Europe, and stronger consumption and exports for China as key factors in the global economic landscape.

In summary, while oil prices are currently pressured by concerns over China’s economic slowdown, the potential for U.S. interest rate cuts and stronger domestic demand for crude are providing some support.

Market watchers will continue to monitor economic indicators and inventory levels closely as they gauge the future direction of oil prices.

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