Oil prices recover Major currencies hold steady
TOKYO - Oil prices rose on Wednesday, recovering from six-month lows hit the previous day, as a larger-than-expected drop in US oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.
Brent crude futures rose 13 cents, or 0.1 per cent, to $92.47 a barrel by 0035 GMT. West Texas Intermediate (WTI) crude futures climbed 27 cents, or 0.3 per cent, to $86.80 a barrel.
The contracts slumped about 3 per cent on Tuesday as weak US housing starts data spurred concerns about a potential global recession.
“A drawdown of US gasoline stockpiles for a second straight week has reassured investors that demand is resilient, prompting buys,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
“Still, the oil market is expected to stay under pressure, with fairly high volatility, due to worries over a potential global recession,” he said.
US crude and fuel stocks fell in the latest week, according to market sources citing American Petroleum Institute figures on Tuesday.
Crude stocks fell by about 448,000 barrels for the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels, while distillate stocks fell by about 759,000 barrels, according to the sources.
An extended Reuters poll showed on Tuesday that crude inventories likely dropped by around 300,000 barrels last week and gasoline stockpiles likely fell 1.1. million barrels, while distillate inventories rose.
HONG KONG - Major currencies were holding steady on Wednesday, ahead of another day when central bank policy takes centre stage for traders with a Reserve Bank of New Zealand meeting and the Federal Reserve’s minutes from its recent meeting both due.
The dollar index, which tracks the greenback against six main peers, was at 106.46 in morning trade, having ended Tuesday largely unchanged. The index recovered most of the ground it lost last week after cooler-than-expected US inflation but remains well off its mid July top of 109.29.
“The Fed’s beef with the market in recent days and weeks has been that they (the Fed) don’t subscribe to the market’s view that it will be cutting rates in 2023,” said Ray Attrill, global head of FX strategy at National Australia Bank.
“So if there are things in the minutes that push back against that notion, and that leads to a repricing of the US rate curve for 2023, that could be a catalyst for a reversal of the US dollar weakness that has characterised this last month or so.”
He said that also of interest is whether the recent equity market rally would continue, as risk sentiment and the US dollar had been negatively correlated in recent months. The euro was steady at $1.0169 after squeezing out small gains overnight, and sterling was last fetching $1.2106.
The Japanese yen was at 134.1 in early Asia.
The currency has been a major beneficiary of the softer dollar and firmed to as much as 131.7 per dollar last week, but has since given back some of those gains.