Oil prices rose, today, Wednesday, as European stocks rose, the dollar settled on a monthly top, and gold remained awaiting the decisions of the US Central Bank.
The price of Brent crude rose for the fifth consecutive session, as sentiment improved against the backdrop of falling stocks and reviving demand after the Corona virus pandemic.
Brent crude rose 47 cents, or 0.6%, to $74.46 a barrel by 0700 GMT, its highest level since April 2019.
US crude rose 42 cents, or 0.6%, to $72.54 a barrel, its highest level since November 2018.
“Even non-energy traders are betting that oil prices will continue to rise,” said Edward Moya, chief market analyst at OANDA.
“Everyone’s expectations are turning excessively towards the rise in oil prices. The prospects for demand for crude are very strong, as with the recovery in America, Europe and Asia, demand will return to pre-Covid-19 levels in the second half of next year,” Moya added.
Two market sources, citing data from the American Petroleum Institute, said on Tuesday that US oil inventories fell by 8.5 million barrels in the week ending on June 11.
Analysts polled by Reuters had indicated that crude inventories are expected to decline for the fourth consecutive week by 3.3 million barrels last week. Official data is expected on Wednesday.
Executives from major oil trading companies said on Tuesday that they expect prices to remain above $70 a barrel and demand to return to pre-pandemic levels in the second half of 2022.
Also, European stocks rose today as energy stocks tracked the impact of a jump in oil prices, while investors’ attention turned to the US Federal Reserve meeting for indications on whether the central bank will start discussing reducing its ultra-accommodative monetary policy.
The pan-European Stoxx 600 index rose 0.3% by 0704 GMT.
If the index sticks to its gains until the end of the session, it will record the longest winning streak in three and a half years.
Britain’s FTSE 100 index, which is packed with commodity companies, rose 0.3% as oil majors BP and Shell followed suit with a jump in Brent crude, reaching its highest level since April 2019.
The European energy stock index added 0.6%.
The dollar settled near the peak of a month against a basket of currencies, and there was little change in the dollar index at 90.499, after hitting its highest level in one month on Tuesday, despite the mixed US economic data.
US retail sales fell more than expected in May, while April’s data was revised to a sharp rise and far above its pre-pandemic level.
The data reinforced the belief in a strong economic recovery with the return of spending to services again from goods, as vaccination campaigns allowed Americans to travel and participate in other activities.
The euro was stable at $1.2129, unchanged on the day, but it is struggling to recover from last week’s losses after the European Central Bank pledged to keep stimulus unchanged during the summer months.
The yen was little changed at 110.06 against the dollar, near the two-month low of 110.325 yen touched last month, and the Bank of Japan is expected to extend some pandemic stimulus measures this week.
The British pound, the strong performer since the beginning of the year, hit a one-month low of $1.4035 yesterday, despite the stronger-than-expected employment data. And settled today in the latest trading at 1.40885 dollars.
In the cryptocurrency markets, bitcoin was trading at around $40,295, after hitting a nearly one-month high of $41,341 on Tuesday, buoyed by a pledge of new investment by MicroStrategy, a major supporter of the coin, and an upbeat tweet from Tesla President Elon Musk.
And gold stabilized as investors awaited the outcome of the latest meeting of the US Federal Reserve for indications of a possible reduction of economic support measures, while the dollar’s rise imposed pressure on the yellow metal.
There was little change in gold in spot transactions at $ 1859.32 an ounce by 0523 GMT. Gold fell to its lowest level since May 17 to $1,843.99 on Monday.
US gold futures rose 0.2% to $1,860.40.
“Gold is down over a few days and this reflects growing expectations that the (Fed) cut back on quantitative easing may start sooner than the market currently expects,” said Ilya Spivak, currency strategist at the Daily Fix.
He continued, “Gold entered the next stage lower. The imminent support at this stage is around $1850. If we break through that with the help of (the reserve meeting) over the next 24 hours, gold may head towards $1800.”
As for other precious metals, silver gained 0.3% to $27.71, palladium fell 0.2% to $2757.77, while platinum declined 0.2% to $1150.99.