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Big Surprise from ISM Data Stokes Inflation Concerns in the US
European markets trimmed Monday gains, USD recovered some lost ground after yesterday sell-off as the uncertainty remains high associated with the partial reinstation of lockdown in the United States.
The US service sector surprisingly improved in June. ISM business activity index in the services sector jumped from 41 to 66 points (49 points exp.). The leading component of new orders also advanced from 41.9 to 61.6 points, which bodes well for broad index of business activity in the next month.
Saudi Arabia once again raised the August selling prices for oil for most grades going to Asia, the US and Europe. which is seen as a signal of strengthening demand. The price of Arab Light for the Asian region rose by $1, which, however, turned out to be less than the market expected. It should also be noted that the differential between the benchmark and the price of Russian Urals in Europe continues to widen, which indicates an improvement in EU energy consumption outlook. Of course, OPEC is forced to seek trade-off between production cuts and price strategy, which will put pressure on the margin of refineries.
Today we expect release of the monthly short-term energy outlook from EIA in which the agency provides forecast for oil production in the United States. Given that oil prices are rising and some producers in the United States said they plan to increase production in response to this, it will be interesting to see how the EIA takes this information into account in its forecast. Last month, the EIA predicted an average rate of US oil production at 11.57 million bpd, 660K bpd. lower than a year earlier. Also, API weekly inventory data is expected today, which is likely to indicate further inventory decline, which should help WTI to move higher.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
European markets trimmed Monday gains, USD recovered some lost ground after yesterday sell-off as the uncertainty remains high associated with the partial reinstation of lockdown in the United States.
The US service sector surprisingly improved in June. ISM business activity index in the services sector jumped from 41 to 66 points (49 points exp.). The leading component of new orders also advanced from 41.9 to 61.6 points, which bodes well for broad index of business activity in the next month.
Saudi Arabia once again raised the August selling prices for oil for most grades going to Asia, the US and Europe. which is seen as a signal of strengthening demand. The price of Arab Light for the Asian region rose by $1, which, however, turned out to be less than the market expected. It should also be noted that the differential between the benchmark and the price of Russian Urals in Europe continues to widen, which indicates an improvement in EU energy consumption outlook. Of course, OPEC is forced to seek trade-off between production cuts and price strategy, which will put pressure on the margin of refineries.
Today we expect release of the monthly short-term energy outlook from EIA in which the agency provides forecast for oil production in the United States. Given that oil prices are rising and some producers in the United States said they plan to increase production in response to this, it will be interesting to see how the EIA takes this information into account in its forecast. Last month, the EIA predicted an average rate of US oil production at 11.57 million bpd, 660K bpd. lower than a year earlier. Also, API weekly inventory data is expected today, which is likely to indicate further inventory decline, which should help WTI to move higher.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 76% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.