US crude slumps over 4% despite OPEC's outlook on Chinese demand
Oil prices fell on Tuesday sharply despite OPEC's positive outlook for Chinese demand this year.
OPEC's outlook
In its monthly report, OPEC raised its forecasts for growth in Chinese oil demand once more in 2023 after easing Covid 19 restrictions, while still maintaining its global growth forecasts unchanged.
OPEC expected global demand on crude to rise by 2.32 million bpd, or 2.3% in 2023.
The growth in Chinese demand was expected to bolster the oil market after a slump in prices following the collapse of the US SVB bank, triggering concerns about a wider economic impact.
OPEC warned the brisk pace of rate hikes worldwide and rising global debt could weigh heavily on growth and demand.
OPEC expects Chinese demand to rise by 710 thousand bpd in 2023, up from previous forecasts of 590 thousand bpd.
OPEC also reported an increase of 117 thousand bpd in its crude output to 28.92 million bpd.
US Economy
The fallout of the US bank's collapse continue to reverberate in the US and global markets, causing disruptions.
Investors are worried the crisis might cause a US recession, especially as the Federal Reserve continues to tightening policies aggressively.
US President Joe Biden attempted to reassure the markets, calling for confidence in the banking system following the Silicon Valley Bank collapse, the second largest banking collapse since 2008.
Biden asserted consumers deposits are always protected, calling for small companies nationwide to deposit cash into banks to support liquidity.
Credit rating agency, Moody's, revised its outlook rating for the US banking sector to negative due to worsening operating environment following the recent collapses.
On trading, US crude futures due in April fell 4.1% as of 18:15 GMT to $71.7 a barrel.
Brent futures due in May fell 3.7% to $77.7 a barrel.
Dollar stabilizes following inflation data, banking uncertainty
Dollar stabilized against most major rivals on Tuesday amid ongoing market uncertainty following the collapse of the Silicon Valley Bank.
US Banking
The fallout of the US bank's collapse continue to reverberate in the US and global markets, causing disruptions.
Investors are worried the crisis might cause a US recession, especially as the Federal Reserve continues to tightening policies aggressively.
US President Joe Biden attempted to reassure the markets, calling for confidence in the banking system following the Silicon Valley Bank collapse, the second largest banking collapse since 2008.
Biden asserted consumers deposits are always protected, calling for small companies nationwide to deposit cash into banks to support liquidity.
Credit rating agency, Moody's, revised its outlook rating for the US banking sector to negative due to worsening operating environment following the recent collapses.
Yields and Inflation
US inflation slowed down in February to one and a half year lows as expected.
US consumer prices rose 6% y/y in February, matching analysts' expectations and slowing down from 6.4% in January.
Core prices, excluding food and energy, rose 5.5%, matching expectations and slowing down from 5.6% in January.
US two-year treasury yields rose by 31 basis points to 4.342% as of 5:57 GMT, marking the biggest daily gain since 2009.
Such yields marked the biggest fall since 1987 yesterday on concerns about the spread of bank failures following the collapse of the SVB.
US 10-year treasury yields rose to 3.643%, while 30-year yields rose to 3.747%.
The dollar index rose 0.1% as of 18:09 GMT to 103.6, with a session-high at 104.05, and a low at 103.5.
Aussie
AUD/USD rose 0.2% as of 18:27 GMT to 0.6679.
Loonie
CAD/USD rose 0.4% as of 18:27 GMT to 0.731.
Dow Jones rallies 480 points following inflation data
US stock indices gained ground as concerns recede about the US banking sector following the collapse of the Silicon Valley Bank, and after US inflation data.
Inflation Slowdown
US inflation slowed down in February to one and a half year lows as expected.
US consumer prices rose 6% y/y in February, matching analysts' expectations and slowing down from 6.4% in January.
Core prices, excluding food and energy, rose 5.5%, matching expectations and slowing down from 5.6% in January.
US Banking
The fallout of the US bank's collapse continue to reverberate in the US and global markets, causing disruptions.
Investors are worried the crisis might cause a US recession, especially as the Federal Reserve continues to tightening policies aggressively.
US President Joe Biden attempted to reassure the markets, calling for confidence in the banking system following the Silicon Valley Bank collapse, the second largest banking collapse since 2008.
Biden asserted consumers deposits are always protected, calling for small companies nationwide to deposit cash into banks to support liquidity.
US Yields
US two-year treasury yields rose by 31 basis points to 4.342% as of 5:57 GMT, marking the biggest daily gain since 2009.
Such yields marked the biggest fall since 1987 yesterday on concerns about the spread of bank failures following the collapse of the SVB.
US 10-year treasury yields rose to 3.643%, while 30-year yields rose to 3.747%.
Dow Jones rose 1.5%, or 480 points to 32,300, while S&P 5090 rose 2%, or 78 points, to 3,934, while NASDAQ added 2.3%, or 262 points to 11,451.
Palladium rises above $1,500 an ounce
Palladium prices rose on Tuesday as the dollar edged up against most major rivals, while receiving support as concerns recede about a US recession due to US policy tightening.
Inflation Slowdown
US inflation slowed down in February to one and a half year lows as expected.
US consumer prices rose 6% y/y in February, matching analysts' expectations and slowing down from 6.4% in January.
Core prices, excluding food and energy, rose 5.5%, matching expectations and slowing down from 5.6% in January.
What Does it Mean?
Such a slowdown might force the Federal Reserve to slow down its pace of policy tightening in March.
The rapid pace in rate hikes was the cause for concerns about US recession, in turn hurting demand on minerals.
Palladium is highly demanded by the electronics and car industries for its use to reduce exhausts.
Otherwise, the dollar index rose 0.2% to 103.7 as of 15:03 GMT, with a session-high at 104.05, and a low at 103.5.
Palladium futures due in June rose 2% to $1,506 an ounce as of 15:04 GMT.