Oil Gains on Tanker Attacks, Investors Await US Retail Sales
Oil prices rose yesterday following attacks on two oil tankers in the Gulf of Oman. The attacks sparked fresh tensions between Iran and the US and generated concerns over supply flows through one of the globe’s most vital sea lines. Today, investors will turn attention to the US retail sales as they try to figure out whether and by how much the FOMC is willing to cut rates in the months to come. In the UK, Boris Johnson took a strong lead in the first voting round among Conservative MPs, while in Switzerland, the SNB stood pat, revising slightly higher its inflation projections.
Oil Rebounds Following Attacks on Oil Tankers, US Retail Sales in Focus
The dollar traded higher against all but three of the other G10 currencies. It gained the most against NZD, which came under strong selling interest after the slide in New Zealand’s Business PMI for May, while the second and third place were taken by NOK and SEK respectively. The dollar underperformed somewhat only against CHF, while was found virtually unchanged against CAD and JPY.
The strengthening of the franc and the resistance of the yen suggest that investors’ appetite remained soft yesterday as well. However, although most Asian indices closed in negative territory today, that was not the case with the EU and US bourses yesterday. Most EU and US indices ended their sessions in the green, with metal and mining companies helping European stocks, and US energy shares lifting Wall Street.
Energy shares gained on the back of the rebound in oil prices, which was triggered by attacks on two tankers in the Gulf of Oman.The attacks sparked fresh tensions between Iran and the US and generated concerns over supply flows through one of the globe’s most vital sea lanes. Both Brent and WTI gained 2.32% and 1.86% respectively, a day after they suffered due to a surge in US crude inventories.
With data pointing towards growing US production and the OPEC cutting its forecasts for growth in global oil demand, we remain skeptical as to whether yesterday’s recovery can last for long. The broader trend in oil prices remains negative, and thus, we would not rule out a U-turn back south soon. Nevertheless, with OPEC and its allies due to meet…