Oil prices hover near six-month low as global trade wars erupt
Global oil prices fell in European trade on Wednesday on track for the fourth profit in a row, with US crude trading near four-month lows, while Brent traded near six-month lows as the global trade war erupted, threatening global growth and fuel demand.
Recent initial data showed US crude stocks fell for the second straight week with traders now waiting for the official EIA report later today.
Prices
US crude fell 1.6% today to $66.94 a barrel, with a session-high at $68.06.
Brent fell 1.45% today to $70.04 a barrel, with a session-high at $71.19.
On Tuesday, US crude lost 0.6%, the third loss in a row, while marking a four-month low at $66.80, as Brent dropped 0.5%, hitting six-month lows at $69.79.
The Global Trade War
US President Donald Trump implemented 25% tariffs on Canada and Mexico, and doubled the additional tariffs on Chinese imports to 20%.
In response, China imposed 10-15% tariffs on some US imports starting March 10, while China imposed 25% imports on a variety of US products, with Mexico expected to follow soon.
Trump once again threatened to impose reciprocal tariffs on many of the world’s countries dependent on their tariffs on US products, thus raising concerns about inflation and growth in the US.
OPEC+
OPEC+ decided on Monday to go ahead with a scheduled production hike amounting to 138 thousand bpd in April, the first such hike since 2022.
It was a surprising decision to the markets, and is likely linked to Donald Trump’s calls for a reduction in oil prices worldwide.
US Stocks
Initial data from the American Petroleum Institute showed a drawdown of 1.5 million barrels in US crude stocks last week, the second in a row, passing estimates of a 0.3 million barrels drop.
Now traders await official data from the Energy Information Administration, still expected to show an inventory drawdown of 0.6 million barrels.
Bitcoin rallies 4% after MetaPlanet's purchases
Bitcoin rallied 4% on Wednesday and traded once more above $90,000 amid positive sentiment after additional purchases by major corporations.
Now markets await a series of important US labor data, which will provide fresh pricing for the odds of a Fed rate cut in March.
Prices
Bitcoin rose 4% at Bitstamp to $90,703, with a session-low at $86,397.
On Tuesday, bitcoin rallied 1.25%, the third profit in four days, moving away from three-month lows at $78,197.
Crypto Market Value
The market value of cryptocurrencies rose $85 billion on Wednesday to a total of $3062 trillion.
MetaPlanet
Japan’s MetaPlanet corporation continued to expand its holdings of bitcoin, adding 497 more units this week at a value of $43.9 million, with an average price of $88,448, with the company’s total holdings rising to 2888 units valued at $240.2 million.
This mirrors US Microstrategy’s crypto hoarding strategy, and shows increasing institutional confidence in bitcoin as a strategic reserve.
US Rates
New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 7%.
Now investors await important US data on private sector employment and the official payrolls report later this week to gather more clues.
US dollar deepens losses to four-month trough before private sector employment data
The US dollar fell in European trade on Wednesday against a basket of major rivals, extending losses for the third straight session and plumbing four-month lows amid concerns about the impact of the global trade wars on US growth.
Now investors await important US data later today on private sector employment to gather more clues on the path ahead for Fed monetary policies.
The Index
The dollar index fell 0.65% today to 104.85, the lowest since November 8, with a session-high at 105.77.
On Tuesday, the index lost 1%, marking the heftiest loss since January 20 amid a heavy selloff.
Global Trade Wars
US President Donald Trump implemented 25% tariffs on Canada and Mexico, and doubled the additional tariffs on Chinese imports to 20%.
In response, China imposed 10-15% tariffs on some US imports starting March 10, while China imposed 25% imports on a variety of US products, with Mexico expected to follow soon.
Trump once again threatened to impose reciprocal tariffs on many of the world’s countries dependent on their tariffs on US products, thus raising concerns about inflation and growth in the US.
US Rates
New York Fed President John Williams said the US tariffs will likely push inflation higher, but he believes current interest rate policies are suitable and don’t require changes.
According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in March stood at just 7%.
Now investors await important US data on private sector employment and the official payrolls report later this week to gather more clues.
The US private sector is expected to have added 141 thousand new jobs in February, down from 183 thousand in January.
