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February 20th - US core PCE inflation rose more than expected in December, and various signs indicate that inflation will accelerate further in January, reinforcing market expectations that the Federal Reserve will not cut interest rates before June. Data released Friday by the US Bureau of Economic Analysis showed that, excluding volatile food and energy prices, the core PCE index rose 0.4% month-over-month in December, compared to economists forecasts of a 0.3% increase. The core PCE inflation rate rose 3.0% year-over-year, compared to 2.8% in November. Core PCE is one of the Federal Reserves most favored indicators. This data is included in the fourth-quarter GDP forecast report released Friday. Although the US Bureau of Labor Statistics Consumer Price Index report released last week showed a moderate increase in Januarys CPI, inflation in the service sector still exhibits some lag. Economists also noted a surge in legal services prices in January.February 20th - U.S. economic growth lagged behind expectations at the end of last year, dragged down by a record government shutdown, weak consumer spending, and trade. According to preliminary estimates released by the U.S. government on Friday, the annualized growth rate of gross domestic product (GDP) in the fourth quarter, adjusted for inflation, was 1.4%, down from 4.4% in the previous quarter. Data from the Bureau of Economic Analysis showed that the overall economy grew by 2.2% last year. The weak economic performance fell short of all expectations in a Bloomberg survey of economists, as the U.S. government was shut down for nearly half of the three-month period during the quarter. The Bureau of Economic Analysis stated that the government shutdown reduced GDP by about one percentage point. Despite the slowdown at the end of the year, these figures still marked a solid year for the U.S. economy. The U.S. economy contracted in the first quarter due to a surge in imports before tariffs took effect, but subsequently achieved one of its strongest growth rates in years. This turnaround was thanks to Trumps abandonment of the toughest tariffs and the Federal Reserves interest rate cuts, which propelled the stock market to record highs and enabled wealthy Americans to continue spending.February 20th - The U.S. economy slowed in the fourth quarter of last year, impacted by the record government shutdown and slowing consumer spending. Data released Friday by the Commerce Department showed that, after seasonal and inflation adjustments, the annualized growth rate of U.S. gross domestic product (GDP) in the fourth quarter was 1.4%. Economists surveyed by The Wall Street Journal had expected a figure of 2.5%. The fourth-quarter growth rate was a significant slowdown from the astonishing 4.4% growth rate seen in the summer. Federal government spending fell by 16.6% in the fourth quarter.German Finance Minister Klingbeer on ECB President Lagardes term: This is just speculation, and I will not participate in speculation.Following the release of the latest economic data, U.S. short-term interest rate futures showed little change; traders continue to bet that the Federal Reserve will cut rates in June.

As The Dollar Rises, Oil Falls Despite Russian Supply Cuts

Skylar Williams

Feb 27, 2023 14:11

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Oil prices dipped in volatile trade on Monday, as a stronger dollar and concerns of recession risks offset gains from Russia's plans to deepen oil supply cuts.


At 04:11 GMT, West Texas Intermediate U.S. crude futures (WTI) were trading 23 cents or 0.3% lower at $76.09 per barrel, while Brent crude futures were down 30 cents or 0.36% at $82.86 per barrel.


Friday's closing prices for both indices were up by more than 90 cents.


Monday, the dollar hovered near a seven-week high after a slew of strong U.S. economic data bolstered the view that the Federal Reserve will need to raise interest rates further and for an extended period of time.


A strong dollar increases the cost of U.S. dollar-priced goods for foreign currency holders.


Vandana Hari, founder of oil market analysis firm Vanda (NASDAQ:VNDA) Insights, stated, "Crude continues to receive direction from the broader financial markets' sentiment."


Fears of a hawkish Federal Reserve returned to the forefront on Friday after the personal consumption expenditures (PCE) price index increased by 0.6% in January, following a 0.2% increase in December.


"Crude will undoubtedly face renewed pressure if risk aversion continues to grow," Hari predicted.


Last week, U.S. crude oil inventories reached their highest level since May 2021, according to data from the Energy Information Administration (EIA). This development added to the downward pressure on crude oil prices.


"The EIA data continue to generate more questions rather than provide clarity on markets," analysts at the consulting firm Energy Aspects wrote in a note, referring to the steep supply adjustment in the data that contributed to the increase.


On the supply side, Russia intends to reduce oil exports from its western ports by as much as 25% in March compared to February, exceeding its previously announced 5% production cut for the month.


Since February 24, 2022, when Russian military entered Ukraine for the first time, oil prices have decreased by approximately six percent annually.


Russia ceased oil deliveries to Poland via the Druzhba pipeline, the CEO of Polish refiner PKN Orlen said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.


Two weeks after the invasion, oil prices soared to a record high of nearly $128 per barrel due to supply worries, but have since retreated due to fears of a global economic decline.


Separately, investors are awaiting this week's China manufacturing surveys to determine the direction of crude demand. This weekend marks the beginning of China's annual parliamentary session, during which new economic policy goals and guidelines will be introduced.


Ning Zhang, senior China economist at UBS Investment Bank, said in a note: "We anticipate the government to reiterate the importance of growth support and call for more policy support."


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