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June 7th - As the conflict with Iran triggers global inflationary pressures, the European Central Bank (ECB) is expected to raise interest rates by 25 basis points next week, becoming the first major central bank among the G7 to tighten monetary policy. Markets anticipate at least one more rate hike this year. In contrast, the Bank of Canada is likely to keep its rates unchanged, while the Federal Reserve and the Bank of England are expected to remain on hold this month, observing the impact of the Iranian conflict. ECB officials aim to ensure that inflation in the Eurozone does not become deeply entrenched, but a rate hike would come at the cost of further dragging down an already weak economy. ECB President Christine Lagarde is likely to provide a clearer signal on the next steps at the press conference following the decision. Meanwhile, the ECB will also release its quarterly economic forecasts, assessing different scenarios of the energy shocks impact on the regional economy.On June 7th, Willie Walsh, Director General of the International Air Transport Association (IATA), stated that rising jet fuel prices are expected to lead to more airline bankruptcies and industry consolidation. He pointed out that a merger between United Airlines and American Airlines is unlikely due to regulatory hurdles. Walsh also stated that once the Middle East conflict subsides, airlines and hubs in the Gulf region will regain market share. Furthermore, despite disappointing progress in clean fuels, IATA remains committed to its 2050 net-zero emissions target.The Russian Ministry of Defense stated that its air defense forces intercepted 339 Ukrainian drones in multiple regions, including Moscow, within 13 hours.On June 7th, local time, the Russian Ministry of Defense stated on the 6th that Russian forces had seized control of the Shevchenko settlement in Kharkiv Oblast and struck 153 areas in Ukraine. These included production, storage, and launch sites for long-range drones; fuel, transportation, and port infrastructure; and temporary deployment points for Ukrainian armed forces and foreign mercenaries. The General Staff of the Ukrainian Armed Forces stated on the 6th that Ukrainian forces attacked targets including Russian personnel assembly areas, drone control points, and artillery systems.Ukrainian Foreign Minister Kuleba: Russian forces attacked two civilian search and rescue vessels in Ukrainian waters, causing casualties.

Oil Prices Climb As U.S. Stocks Plummet Before Demand-heavy Holidays

Charlie Brooks

Dec 22, 2022 11:37

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Oil prices extended advances into a fourth consecutive session on Thursday after inventory data indicated that U.S. supplies were tight ahead of a demand-heavy holiday season; but, caution ahead of crucial economic indicators restrained gains.


In the preceding week, U.S. crude inventories decreased far more than anticipated, with drops in heating oil and jet fuel stocks occurring just ahead of an anticipated rise in travel demand and a possible cold snap towards the end of the year.


Even as the government took more than 3 million barrels of crude from the Strategic Petroleum Reserve, inventories decreased, showing that demand remained solid.


This week's increase in the yen has exerted downward pressure on the dollar, which in turn has boosted crude oil prices. However, the dollar stabilized on Thursday ahead of critical inflation and economic growth reports.


Brent oil futures traded in London increased 0.4% to $82.56 per barrel by 21:21 ET, while West Texas Intermediate futures rose 0.6% to $78.73 per barrel (02:21 GMT). Both contracts are trading approximately 5% higher for the week, with confidence regarding the reopening of China's economy further boosting sentiment.


On Thursday and Friday, respectively, revised U.S. gross domestic product (GDP) figures and the personal consumption expenditures (PCE) price index will be released. The second reading of U.S. economic growth for the third quarter is projected to remain unchanged at 2.9%, as robust consumer spending and a stable labor market supported the world's largest economy.


The PCE data, which is the Federal Reserve's favored inflation gauge, will be monitored more closely. Even while the number is predicted to have decreased more in November compared to the previous month, it is still anticipated to be considerably above the Fed's target range.


Last week, oil prices fell to a one-year low due to fears of a probable recession, which were fueled by rising interest rates and surging inflation. A spate of hawkish signals from the world's most influential central banks has also weighed on petroleum prices.


However, crude prices rebounded from annual lows as the dollar weakened. In addition to optimism on China's reopening, the government loosened anti-COVID laws.


China's near-term picture remains murky, as the world's largest crude importer is also confronting a massive increase in COVID-19 cases. However, the markets are bracing themselves for a potential revival in Chinese demand, which, according to some analysts, could bring oil prices back above $100 in 2023.

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