Oil ticks up as markets like Chinese stimulus, falling US inventories

LONDON (Reuters) – Oil prices crept up on Friday, buoyed by economic stimulus in slow-recovering China and falling inventories in the US.

Brent futures were up 65 cents to USD 80.29 a barrel by 0817 GMT, while US West Texas Intermediate (WTI) crude climbed 64 cents to USD 76.29 a barrel. Prices closed marginally higher on Thursday.

China’s weak economic figures had kept a lid on prices through the week. The world’s second biggest oil consumer this week posted disappointing growth in second-quarter gross domestic product, increasing the likelihood the economy will miss the government’s 5% annual growth target.

However, sentiment across commodity markets has picked up on hopes the central government would roll out stimulus measures. On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics to shore up its sluggish economy.

“The announcement remains short on detail but notions of China buying more cars gives rise in hope for oil investor bulls,” PVM analyst John Evans said.

Meanwhile, recent US data, including lower-than-expected inflation and moderating job growth, have convinced many investors and analysts the Federal Reserve’s expected July rate hike will be the last of its current tightening cycle.

Supply fundamentals are also adding to the optimism.

In early July, Riyadh said it would extend a voluntary output cut of 1 million barrels per day (bpd) into August, while Moscow said it would cut exports by 500,000 bpd in August.

“That tightness in supply is already showing up in inventories,” analysts from ANZ Bank said.

US crude inventories fell last week, supported by a jump in crude exports as well as higher refinery utilisation, the Energy Information Administration (EIA) said on Wednesday.

(Reporting by Natalie Grover in London; Additional reporting by Arathy Somasekhar in Houston and Andrew Hayley in Beijing; editing by Jamie Freed and Jason Neely)

Oil rallies for fourth straight week on tightening supply

BENGALURU, July 21 (Reuters) – Oil prices rose nearly 2% on Friday to record a fourth consecutive weekly gain, buoyed by growing evidence of supply shortages in the coming months and rising tensions between Russia and Ukraine that could further hit supplies.

Brent crude futures rose USD 1.43, or 1.8%, to settle at USD 81.07 a barrel, with a weekly gain of about 1.2%. US West Texas Intermediate crude ended USD 1.42, or 1.9%, higher at USD 77.07 a barrel, its highest since April 25. WTI gained nearly 2% in the week.

“The oil market is starting to slowly price in a looming supply crunch,” Price Futures Group analyst Phil Flynn said.

“Global supplies are starting to tighten and that could accelerate dramatically in the coming weeks. Increased war risk could also impact prices,” Flynn said.

Russia hit Ukrainian food export facilities for a fourth day in a row on Friday and practiced seizing ships in the Black Sea, in an escalation of tensions in the region since Moscow’s withdrawal this week from a U.N.-brokered safe sea corridor agreement.

A shutdown of the grain corridor could hit supplies of ethanol and biofuels that are blended with oil products at a time when global grain markets are already tightening, which would lead to refiners using more crude oil, Flynn said.

The seizure of ships could also add risks to oil and other goods exports in the region, he added. The Kremlin on Friday said Ukraine’s “unpredictable” actions pose a danger to civilian shipping in the Black Sea, and the situation around Russian exports requires analysis.

In the US, crude inventories fell last week, amid a jump in crude exports and higher refinery utilization, the Energy Information Administration (EIA) said on Wednesday. Earlier on Monday, the EIA had forecast that US shale oil and gas production was likely to decline in August for the first time this year, adding to concerns of supply tightness.

Meanwhile, US energy firms this week reduced the number of oil rigs by seven, their biggest cut since early June, energy services firm Baker Hughes said. At 530, the US oil rig count, an early indicator of future output, is at its lowest since March 2022.

UAE Energy Minister Suhail al-Mazrouei told Reuters that current actions by OPEC+ to support the oil market were sufficient for now and the group was “only a phone call away” if any further steps were needed.

Chinese authorities unveiled plans to help boost sales of automobiles and electronics, a move welcomed by investors hoping that it would reinvigorate the country’s sluggish economy.

Next week, preliminary purchasing manager surveys from S&P Global will be key for investors trying to understand changing global demand, Rob Haworth, senior investment strategist at US Bank Asset Management, said.

(Reporting by Shariq Khan in Bengaluru; Additional reporting by Natalie Grover in London, Arathy Somasekhar in Houston, and Andrew Hayley in Beijing; Editing by Marguerita Choy and David Holmes)

Tesla, Netflix pull Nasdaq and S&P lower, Dow ends higher

NEW YORK, July 20 (Reuters) – The S&P 500 and Nasdaq fell on Thursday, weighed down by drops in Tesla and Netflix following their quarterly results, but the Dow advanced for a ninth straight day thanks to gains in Johnson & Johnson following a strong annual forecast.

Tesla’s (TSLA) shares tumbled 9.74%, its biggest one-day percentage drop since April 20, after the electric-vehicle maker reported a drop in its second-quarter gross margins to a four-year low and CEO Elon Musk hinted at more price cuts.

Netflix (NFLX) slumped 8.41% to suffer its biggest one-day percentage decline since December 15, after the streaming video company’s quarterly revenue fell short of estimates.

“The news last night in Tesla and Netflix, while it’s not the end of the world does give people a reason to wake up and go ‘wow, maybe I shouldn’t be chasing these names up here,'” said Ken Polcari, managing partner at Kace Capital Advisors in Boca Raton, Florida.

“Let me take some money off the table and redeploy it into big boring names.”

The Dow, however, was able to climb as Johnson & Johnson (JNJ) gained 6.07% after reporting results and announcing an annual profit forecast raise.

The Dow Jones Industrial Average rose 163.97 points, or 0.47%, to 35,225.18, the S&P 500 lost 30.85 points, or 0.68%, to 4,534.87 and the Nasdaq Composite dropped 294.71 points, or 2.05%, to 14,063.31.

The decline for the Nasdaq was its largest one-day percentage fall since March 9, while the Dow registered its ninth straight session of gains, its longest winning streak since September 2017.

The Nasdaq has surged 34.4% this year to levels not seen since early April 2022, supported by a seemingly unstoppable rally in megacap growth names such as Nvidia (NVDA) and Meta (META) on optimism over the potential of artificial intelligence, a US economy that has proven more resilient than many anticipated and expectations the end of the Federal Reserve’s aggressive rate hike cycle was on the horizon.

The S&P technology, communication services, and consumer discretionary sectors each dropped at least 2% on Thursday.

Tech shares saw additional pressure after business software maker SAP trimmed its full-year outlook for cloud revenue US-listed shares of SAP closed down 6.34%.

Economic data on Thursday indicated the labor market remains tight, while the housing and manufacturing sectors continue to slump.

United Airlines (UAL) advanced 3.23% after lifting its full-year profit outlook and posted its highest-ever quarterly earnings on booming demand for international travel.

With 77 S&P 500 companies having reported results through Thursday morning, second-quarter earnings are expected to have declined 7.9%, Refinitiv data showed, more than the 5.7% fall expected at the start of the month.

Volume on US exchanges was 11.16 billion shares, compared with the 10.6 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.53-to-1 ratio; on Nasdaq, a 1.88-to-1 ratio favored decliners.

The S&P 500 posted 32 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 67 new highs and 71 new lows.

(Reporting by Chuck Mikolajczak, editing by Deepa Babington)

Yields tick up after lower-than-expected unemployment data

July 20 (Reuters) – US Treasury yields rose on Thursday following new unemployment and manufacturing data that both came in below forecasts, as investors bet on whether the Federal Reserve is nearing the end of its interest rate-hiking cycle.

In a sign of continued labor market strength amid high interest rates, initial jobless claims totaled 228,000 for the week ending July 15, a decline from the previous week and their lowest since mid-May.

Meanwhile, the Federal Reserve Bank of Philadelphia’s Manufacturing Survey showed continued declines in the area’s manufacturing sector, a further sign of its softening.

Further data came on Thursday from the National Association of Realtors, which showed existing home sales dropped 3.3% in June while median existing home sales prices rose to about USD 410,000, the second-highest ever recorded.

Benchmark 10-year Treasury yields spiked following the news and were last at 3.846%, a 10.4 basis point increase from Wednesday’s close.

Interest rate sensitive two-year Treasury yields, meanwhile, also rose on the data. They were last at 4.825%, a 7.1 basis point increase from Wednesday’s close.

The inversion in the yield curve between two-year and 10-year notes at one point widened to as much as minus 105.1 basis points. It most recently sat at minus 98.2 basis points.

The inversion, a key indicator of market sentiments for a recession, has some market participants concerned.

“We really haven’t been in a situation like this with such a severely inverted yield curve since the 1980s,” said Blair Shwedo, head of investment grade trading at US Bank.

“So my concern is just that this [monetary tightening] is going to have a larger impact on the economy than we appreciate at this point.”

While the Fed is widely expected to hike rates a further 25 basis point hikes at its July 25-26 meeting next week, market participants have been mixed as to where it will go in the ensuing months.

“There’s not a lot of certainty on the part of investors about where the data is going next – it’s been a lot of mixed signals,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.

“This just shows you how hypersensitive markets are to any indications,” he added.

Also on Thursday, the Treasury Department auctioned USD 17 billion in Treasury inflation-protected securities at 99.02 cents on the dollar.

July 20 Thursday 3:28 PM New York / 1928 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	5.255	5.4137	0.002
Six-month bills	5.2575	5.4903	0.007
Two-year note	99-161/256	4.8259	0.071
Three-year note	100-48/256	4.4319	0.104
Five-year note	99-156/256	4.0876	0.117
Seven-year note	98-160/256	3.9783	0.116
10-year note	96-44/256	3.8464	0.104
30-year bond	95	3.9103	0.071

DOLLAR SWAP SPREADS
	Last (bps)	Net Change (bps)
US 2-year dollar swap spread	17.50	-1.00
US 3-year dollar swap spread	14.25	-1.00
US 5-year dollar swap spread	7.00	0.00
US 10-year dollar swap spread	2.25	0.25
US 30-year dollar swap spread	-37.75	0.25

(Reporting by Matt Tracy; Editing by Emma Rumney and Marguerita Choy)

Gold slips from 2-month peak as dollar, yields rebound

July 20 (Reuters) – Gold prices slipped from a two-month high on Thursday as the dollar and bond yields ticked higher, although hopes for a pause in rate hikes by the US Federal Reserve after July meeting limited the decline.

Spot gold was down 0.4% at USD 1,969.53 per ounce by 1:42 p.m. EDT (1742 GMT) after hitting its highest since May 17 earlier in the session.

US gold futures settled 0.5% lower at USD 1,970.90.

“The yields and dollar have actually bounced a little, so we’re seeing a slight reverse effect in gold. Also, this USD 2,000 area is going to be a bit of a challenge for the gold market in the short term,” said David Meger, director of metals trading at High Ridge Futures.

The dollar gained 0.6% against its rivals after US jobless claims data, making gold more expensive for other currency holders. Benchmark 10-year US Treasury yields also edged higher.

Data showed the number of Americans filing new claims for unemployment benefits unexpectedly fell last week, touching the lowest level in two months amid ongoing labor market tightness.

Investor focus now shifts to the US central bank’s policy meeting next week, with markets pricing in a 25-basis-point rate hike from the Fed.

Most economists polled by Reuters expect that a hike at the July meeting would be the last increase of the current tightening cycle from the Fed.

Gold is highly sensitive to rising US interest rates, as these increase the opportunity cost of holding non-yielding bullion.

“The recent reversal in gold prices is very much driven by the expectation that the Fed is almost done in terms of interest rate hikes,” said Julius Baer analyst Carsten Menke.

“That said, we believe interest rates are set to stay high and a rapid reversal of monetary policy is not imminent due to the resilience of the US economy.”

Spot silver dropped 1.5% to USD 24.80, having hit its highest since mid-May. Platinum fell 1.8% to USD 955.51, while palladium slipped 2.3% to USD 1,278.02.

(Reporting by Brijesh Patel in Bengaluru; Editing by Shweta Agarwal and Maju Samuel)

Oil settles higher amid low crude stocks, cautious economic outlook

July 20 (Reuters) – Oil prices settled slightly higher on Thursday on lower US crude inventories and strong crude imports by China, but a weaker demand outlook kept investors cautious.

September Brent futures climbed 18 cents, or 0.2%, to settle at USD 79.64 a barrel. August US West Texas Intermediate (WTI) crude gained 28 cents, or 0.4%, to settle at USD 75.63 a barrel.

The August WTI contract expires on Thursday. The more active September WTI crude settled 36 cents higher at USD 75.65.

Strong economic data, low employment and cooler inflation over a year since the Fed began one of its most aggressive rate hiking campaigns in history has supported US oil demand this year.

The US Federal Reserve is expected to raise its benchmark overnight interest rate by another 25 basis points to the 5.25%-5.50% range next week for a final time this rate-tightening cycle.

“Though the US economy is proving much stronger than expected in supporting the Dow Jones Industrial Average, this recent strength appears vulnerable especially if the Fed hikes rates by 25-points next week,” said John Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

In the previous session, prices fell after data showed US inventories fell less than analysts expected.

“It wasn’t a huge draw that some in the market were hoping for, and that’s partially because gasoline demand is lower than it could be for this time of year,” said Bob Yawger, director of energy futures at Mizuho in New York.

China’s economic recovery following its end to COVID-19 curbs has fallen short of expectations. Its oil imports year-on-year surged by nearly half in June, but at the same time stock levels rose to near an all-time high. Traders said China had been pragmatically buying discounted Russian crude.

The Organization of the Petroleum Exporting Countries and the International Energy Agency have said China’s demand is expected to continue to rise in the second half of this year and remain the main driver of global growth.

China’s imports of crude oil from Russia hit an all-time high in June, Chinese government data showed on Thursday, even as discounts against international benchmarks narrowed.

Crude prices may struggle to find a clear direction given a mixed global demand outlook in the next few weeks, Citi analysts said in a note.

Demand is “a mixed picture with stronger gasoline and jet fuel demand, but weaker petchems and diesel,” the analysts said.

Brent crude prices have broken through to a higher range this month, after being stuck at USD 72-USD 78 in May and June, the Citi analysts added, after Saudi output cuts and geopolitical risks supported demand.

(Additional reporting by Ahmad Ghaddar in London and Jeslyn Lerh in Singapore; Editing by Barbara Lewis, Emelia Sithole-Matarise, Andrea Ricci, Deepa Babington, and Cynthia Osterman)

10-year yields down on day following lackluster new housing data

July 19 (Reuters) – The US 10-year Treasury’s yield was down on Wednesday following new home construction data for June but remained above its month low as investors bet that the Federal Reserve is nearing the end of its rate-hiking cycle.

Benchmark 10-year Treasury yields dipped 4.5 basis points to 3.744%, compared to an eight-month high of 4.094% set on July 7.

Two-year yields, meanwhile, ticked up slightly by 1.1 basis points to 4.763% after a brief drop immediately following the morning’s new housing data. They were similarly down from 5.120% on July 6, their highest since June 2007.

The yield curve inversion between two-year and 10-year notes widened to minus 102.4 basis points.

New data on Thursday from the Commerce Department showed US housing starts fell by 8% in June to 1.43 million, lower than the 1.55 million in May, in large part due to a decrease in multifamily construction. Building permits also fell in number, according to the data.

“Yes, there is a little bit of a downward revision from last month, but we’re still going at a housing run rate which is impressive given the level of interest rates,” said Guy LeBas, chief fixed income strategist at asset manager Janney Montgomery Scott.

While mixed in views as to the Fed’s rate path for the remainder of the year, market participants largely anticipate a 25 basis point rate hike following the Fed’s meeting next week on July 25-26.

“I think it would take something quite dramatic to get them to move in September,” said Eric Winograd, director of developed market economic research at AllianceBernstein.

Other market participants put more weight on the idea of a further rate hike before year’s end.

“The persistence of the core inflation is going to probably keep the Fed in the game at least for July and maybe one more after that,” said Lou Brien, market strategist at DRW Trading Group. “And in that sense, the 10-year will benefit from the Fed being more aggressive.”

The Treasury Department auctioned USD 12 billion in 20-year bonds on Wednesday, as well as USD 46 billion in 17-week bills. The 20-year’s yield was down a basis point to 4.064% from 4.074% immediately before the auction.

The next major data points for market participants will come on Thursday with the latest existing home sales and initial jobless claims data, the latter of which is unlikely to sway the Fed’s rate decision next week, according to Winograd.

“There’s nothing to make one think that we should see a dramatic change there,” Winograd said. “It’s off the lows and … consistent with this idea of a gradual rebalancing of the labor market.”

July 19 Wednesday 3:55 PM New York / 1955 GMT

	Price	Current Yield %	Net Change (bps)
Three-month bills	5.255	5.4145	0.003
Six-month bills	5.25	5.483	-0.003
Two-year note	99-190/256	4.7639	0.011
Three-year note	100-114/256	4.3392	0.000
Five-year note	100-24/256	3.9785	-0.022
Seven-year note	99-76/256	3.8661	-0.034
10-year note	96-252/256	3.7444	-0.045
30-year bond	96-60/256	3.8379	-0.063

DOLLAR SWAP SPREADS
	Last (bps)	Net Change (bps)
US 2-year dollar swap spread	18.25	0.00
US 3-year dollar swap spread	15.25	-0.25
US 5-year dollar swap spread	7.00	0.50
US 10-year dollar swap spread	2.00	0.75
US 30-year dollar swap spread	-37.75	1.25

(Reporting by Matt Tracy; Editing by Jon Boyle and Will Dunham)

Gold stalls near 8-week highs on Fed pause hopes

July 19 (Reuters) – Gold prices hovered near an eight-week peak on Wednesday after recent economic data re-ignited hopes that the USD Federal Reserve may soon hit pause on its interest rate-hiking cycle.

Spot gold eased 0.1% at USD 1,977.25 per ounce by 01:43 p.m. ET (1743 GMT), as the USD dollar ticked up from 15-month lows.

US dollar gold futures settled unchanged at USD 1,980.80.

On Tuesday, gold hit its highest since May 24 at USD 1,984.19, before settling about 1.2% higher after USD retail sales rose less than expected in June.

“The market is very confident that rate hikes will end soon and disinflation is in place. After the Fed meet, if the market is convinced the Fed will no longer maintain the extremely hawkish stance, gold prices could reach USD 2,000,” said Edward Moya, senior market analyst at OANDA.

A Reuters poll predicted the Fed would raise its benchmark overnight interest rate by 25 basis points on July 26, with most economists expecting that would be the last increase of the current tightening cycle.

Higher rates make interest-bearing investments more attractive than zero-yield bullion.

Investors will also keep a tab on weekly jobless claims data due on Thursday.

But “with the Fed set to hike next week, and a level of uncertainty and data dependence thereafter, speculators have been unwilling to fully buy-in to the bullish gold narrative,” TD Securities wrote in a note.

Silver rose 0.3% to USD 25.15 per ounce, platinum lost 1% to USD 973.00 and palladium dipped 1.1% to USD 1,305.17.

“Until there’s more confidence in China’s recovery and an improved demand outlook, the industrial metals market might struggle in the near term,” Moya added.

Data showed China’s fiscal revenue grew at a slower annual pace in the first six months, signaling broadening economic pressures that have fanned expectations of fresh stimulus.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Mike Harrison, Shilpi Majumdar and Krishna Chandra Eluri)

Oil perched between demand concerns and supply strains

LONDON (Reuters) – Global oil prices were little changed on Wednesday as markets weighed U.S. demand concerns against China’s pledge to support economic growth.

Brent futureswere flat at USD 79.63 a barrel by 0800 GMT, while US West Texas Intermediate (WTI) crude edged 10 cents lower to USd 75.65 per barrel.

“With the Fed likely to raise interest rates for the last time in July, concerns about US demand that will limit oil price gains are likely to remain,” said CMC Markets analyst Leon Li.

However, on the positive front, China’s top economic planner pledged on Tuesday it would roll out policies to “restore and expand” consumption in the world’s second-largest economy, which could boost oil demand.

“So far, as long as we assume the stimulus in China is going to be successful, oil balances will tighten significantly – even if Europe was to fall in a mild recession,” said Rystad Energy’s North America research director Claudio Galimberti.

On the supply side, data from the American Petroleum Institute (API), an industry group, showed crude oil, gasoline and distillate inventories all fell last week.

PVM analyst John Evans said one of the main reasons behind the market’s benign opening was the API report, with the expectant crude draw of 2.3 million barrels turning into a mere 800,000 barrels.

“Those of us expecting some fireworks … are sorely disappointed as it lands with a bit of a whisper rather than a bang,” he said.

Meanwhile, Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the energy ministry.

(Reporting by Natalie Grover in London; Additional reporting by Katya Golubkova in Tokyo and Trixie Yap in Singapore; Editing by Jamie Freed and David Holmes)

Oil prices dip on profit-taking despite tighter US supplies

NEW YORK, July 19 (Reuters) – Oil prices edged lower on Wednesday, as investors took profits following earlier gains on tighter US crude supplies and China’s pledge to reinvigorate its economic growth.

Brent futures dipped 17 cents at USD 79.46 a barrel, while US West Texas Intermediate (WTI) crude CLc1 dropped 40 cents at USD 75.35 a barrel.

Prices pared gains late in the session after both contracts had risen by over USD 1 a barrel. Market participants took advantage of the higher prices and took profits, said Phil Flynn, an analyst at Price Futures Group.

Strength in the US dollar index also weighed on prices. A stronger greenback makes crude more expensive for investors holding other currencies.

Limiting losses, US crude inventories fell by 708,000 barrels in the last week to 457.4 million barrels, compared with analysts’ expectations in a Reuters poll for a drop of 2.4 million barrels, Energy Information Administration data showed on Wednesday.

The data showed inventories in the Strategic Petroleum Reserve climbed for the first time since January 2021, as the US tries to refill the reserve following last year’s record drawdown.

“It’s an end of an era,” Flynn said. “We’re reminded the SPR releases have come to an end, and the market is going to be on much more solid footing.”

In a measure that could boost oil demand, China’s top economic planner pledged on Tuesday to roll out policies to “restore and expand” consumption in the world’s second-largest economy.

US data on Tuesday showing retail sales rose less than expected in June boosted views that the Federal Reserve will stop raising interest rates. Higher rates increase borrowing costs and can slow economic growth and reduce oil demand.

In another positive sign, European Central Bank governing council member Klaas Knot on Tuesday suggested that rate hikes beyond the ECB’s meeting next week were “by no means a certainty.”

“Traders have started to become a lot more optimistic as inflation eases off. … Any improvement in the inflation data also means an improvement in oil demand,” said Naeem Aslam of Zaye Capital Markets.

Russia is set to reduce its oil exports by 2.1 million metric tons in the third quarter, in line with planned voluntary export cuts of 500,000 barrels per day in August, according to the country’s energy ministry.

(Reporting by Stephanie Kelly in New York; additional reporting by Natalie Grover in London, Katya Golubkova in Tokyo, and Trixie Yap in Singapore; Editing by David Holmes, David Goodman, Paul Simao, Mike Harrison, and Leslie Adler)

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