HOUSTON, Aug 23 (Reuters) – Oil prices dipped 1% on Wednesday as demand woes stemming from a build in U.S. gasoline stocks and weak manufacturing data globally outweighed optimism around a larger-than-expected drop in U.S. crude stocks.

Brent crude was down 82 cents, or 0.98%, at $83.21 a barrel, bouncing off a 2.5% decline earlier in the session. U.S. West Texas Intermediate crude was down 75 cents, or 0.9%, at $78.89. At the session low it was down 3.4%. U.S. gasoline stocks climbed 1.5 million barrels last week, compared with analysts estimates for a 888,000 barrel drop.

Meanwhile, U.S. crude inventories (USOILC=ECI) fell by 6.1 million barrels in the week to Aug. 18, the Energy Information Administration said, helped by strong refining activity and high levels of exports. Analysts had expected a 2.8 million-barrel drop.

While refiners continue to run at a high rate and snap up oil inventories, fuel demand hasn’t been very strong due to tough economic conditions, Kilduff added. Manufacturing data from a host of purchasing managers’ index (PMI) surveys painted a grim picture of the health of economies across the globe.

Japan reported shrinking factory activity for a third straight month in August. Euro zone business activity also declined more than expected, particularly in Germany. Britain’s economy looked looks set to shrink in the current quarter, in danger of falling into recession. U.S. business activity approached the stagnation point in August, with growth at its weakest since February.

Markets are also looking for hints on the outlook for interest rates when Federal Reserve officials and policymakers from the European Central Bank (ECB), the Bank of England and the Bank of Japan head to Jackson Hole, Wyoming, on Thursday.

Talk has shifted to keeping interest rates around where they are now – but for longer than perhaps previously estimated – rather than raising them further. On the supply side, Iran’s crude oil output will reach 3.4 million barrels per day (bpd) by the end of September, the country’s oil minister was quoted as saying by state media, even though U.S. sanctions remain in place.

Saudi Arabia will likely roll over a voluntary oil cut of 1 million barrels per day for a third consecutive month into October, five analysts said, amid uncertainty about supplies and as the kingdom targets drawing down global inventories further.

Reporting by Paul Carsten and Natalie Grover in London, Yuka Obayashi in Tokyo and Andrew Hayley in Beijing Editing by Mark Potter, David Goodman, David Gregorio and David Evans

NEW YORK (Reuters) – The Dow and S&P 500 ended slightly lower on Tuesday as investors stayed worried the Federal Reserve will keep interest rates higher for longer and as banks shares eased. The Nasdaq finished barely in the green.

The financial sector <.SPBK> fell 0.9% and was the biggest drag on the S&P 500. An S&P downgrade of credit ratings of multiple regional U.S. lenders weighed on banks shares, with the KBW regional banking index (.KRX) sliding 2.7% and the S&P 500 banks index (.SPXBK) falling 2.4%.

Investors hope for clarity on the rate outlook when Fed Chair Jerome Powell speaks at a meeting of central bankers on Friday in Jackson Hole, Wyoming.

“Rates have backed up pretty good again, so that’s kind of putting somewhat of a damper on stocks,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The benchmark 10-year Treasury yield hit almost 16-year highs overnight on the view the Fed could keep rates higher for longer. Higher borrowing costs can slow spending by businesses and consumers.

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The Dow Jones Industrial Average (.DJI) fell 174.86 points, or 0.51%, to 34,288.83, the S&P 500 (.SPX) lost 12.22 points, or 0.28%, to 4,387.55 and the Nasdaq Composite (.IXIC) added 8.28 points, or 0.06%, to 13,505.87.

Investors also eagerly awaited results and a forecast from chip heavyweight Nvidia (NVDA.O) due after the bell on Wednesday. Nvidia surprised investors with its strong forecast in May, fueling a rally in its own and other tech stocks amid artificial intelligence hopes.

Shares of Nvidia hit an all-time high of $481.87 early but were down 2.8% on the day.

Department stores were among the day’s biggest decliners. Macy’s (M.N) sank 14.1% after the chain warned of weak consumer spending through the crucial holiday shopping season. Shares of Kohl’s Corp. (KSS.N) were down 10.3% while Nordstrom Inc (JWN.N) was down 9.8%.

Volume on U.S. exchanges was 9.38 billion shares, compared with the 10.97 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favored decliners.

The S&P 500 posted 4 new 52-week highs and 13 new lows; the Nasdaq Composite recorded 39 new highs and 221 new lows.

Reporting by Caroline Valetkevitch; additional reporting by Amruta Khandekar and Shristi Achar A; Editing by Shinjini Ganguli, Maju Samuel and David Gregorio

https://www.reuters.com/markets/us/nvidia-earnings-optimism-drives-futures-higher-2023-08-22/

Investing.com– Oil prices rose in Asian trade on Tuesday, recovering a measure of overnight losses as bets on tightening global supplies helped somewhat offset concerns over potential weakness in demand for the remainder of the year.

Extended production cuts by major suppliers Saudi Arabia and Russia have been the biggest source of support for crude markets in recent weeks, with prices trending at four-month highs on expectations of tighter supplies.

These expectations were also boosted by a leak in Russia’s Druzhba oil pipeline, as well as a recent Ukraine attack on a Russian oil tanker, which could limit oil shipments from the world’s third-largest crude producer.

Brent oil futures rose 0.3% to $85.47 a barrel, while West Texas Intermediate crude futures rose 0.2% to $82.11 a barrel by 21:24 ET (01:24 GMT). Both contracts slid over 1% on Monday, breaking a six-day winning streak.

Demand uncertainty still in play
But gains in oil prices were limited, amid concerns over a demand slowdown this year, especially as the U.S. summer season winds down. Markets fear this could result in fewer big inventory draws in the country.

Economic weakness in China, the world’s largest oil importer, has also weighed on the country’s fuel consumption. While oil shipments to China have remained at record levels, fuel demand has struggled to reach pre-COVID levels.

Trade data due later on Tuesday is set to shed more light on China’s economic health, with both exports and imports expected to have declined further in July. Inflation data from the country is due on Wednesday, and is also expected to offer more economic cues.

Investors are also watching for any more stimulus measures from China, as the country grapples with a slowing post-COVID recovery.

Strong dollar, inflation uncertainty weighs
Strength in the dollar, amid growing uncertainty over the path of U.S. interest rates, also kept a cap on more oil prices.

The greenback saw increased bids this week as investors positioned themselves for a potentially stronger consumer price index inflation reading on Thursday. While U.S. inflation decreased substantially this year, it still remained well above the Federal Reserve’s annual target range, potentially attracting a sustained hawkish stance from the central bank.

Fed officials also offered mixed signals on future rate hikes, brewing more uncertainty over the coming inflation data as investors sought clearer signs of easing U.S. inflation.

Rising interest rates, or even higher-for-longer rates, are expected to weigh on economic activity in the remainder of the year- which investors fear could stymie global oil demand.

July 31 (Reuters) – Wall Street and global stocks edged up on Monday while oil prices gained and the dollar was little changed, as traders looked ahead to corporate earnings and a key employment report due this week.

The Dow Jones Industrial Average (.DJI) rose 0.28% to 35,560.19, the S&P 500 (.SPX) gained 0.15% to 4,589.15 and the Nasdaq Composite (.IXIC) added 0.21% to 14,346.02.

Apple Inc (AAPL.O) and Amazon.com (AMZN.O) both report on Thursday, while other well-known names with results due include Caterpillar Inc (CAT.N), Starbucks Corp (SBUX.O) and Advanced Micro Devices (AMD.O).

European shares gained modestly after euro zone inflation fell further in July seeing that most measures of underlying price growth also eased. Markets took this as a comforting sign for the European Central Bank (ECB) as it considers ending a brutal string of interest rate hikes.

The pan-European STOXX 600 index (.STOXX) rose by 0.12%, a second consecutive monthly gain. MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.15%.

The modest gains came despite China’s manufacturing activity falling for a fourth straight month in July, as demand remained weak at home and abroad, official surveys showed on Monday.

“Markets are treating information with a lot more sensitivity and people are looking into new information with a detailed eye,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers.

“Data out this week should remain superficially consistent with the ‘soft landing’ narrative,” Citi market strategists wrote in a note. “But the potential return to upside surprises to job growth would raise questions about whether slowing inflation can coexist with tight labor markets.”

All three main U.S. indexes have posted recent gains as signs of cooling inflation and a resilient economy have eased investor sentiment about the economy surviving amid higher rates for longer.

Upbeat quarterly earnings from megacap growth companies including Alphabet (GOOGL.O) and Meta Platforms (META.O) as well as chipmakers Intel (INTC.O) and Lam Research (LRCX.O) have also boosted investor sentiment.

Almost 30% of the S&P 500 reports results this week. The index is now up nearly 20% for the year.

Paul Christopher, Wells Fargo Investment Institute’s head of global investment strategy, urged caution given the potential for a weaker economy, slower disinflation and narrower corporate profits.

“This year’s impressive equity rally has been driven by strong sentiment, without either the earnings growth or the directional improvement in economic data to justify current market multiples and valuations,” Christopher wrote in a note.

RISING RATES
Chicago Federal Reserve Bank President Austan Goolsbee on Monday said the U.S. central bank is “walking the line pretty well” on bringing inflation down without causing a recession, and will watch the data as September approaches to judge if more monetary tightening may be appropriate.

The Bank of England is widely expected to raise rates by at least a quarter point. Traders cut bets on a continuing rally in the pound by the most since mid-June ahead of the Bank of England rate decision on Thursday.

Sterling has surged 24% from a record low of $1.033 against the dollar in September after a disastrous budget, hitting a 15-month high of $1.314 in mid-July.

The dollar edged higher on Monday after a survey from the Federal Reserve showed U.S. banks reported tighter credit standards and weaker loan demand during the second quarter, a sign rising interest rates are having an impact on the economy.

The Japanese yen weakened about 0.8% versus the dollar . Investors continued to digest Friday’s decision by the Bank of Japan (BOJ) to lift the lid on bond yields in a step away from its ultra-easy policies.

Japanese 10-year yields surged to a nine-year high up to 0.6% on Monday, and toward the new cap of 1.0%.

U.S. Treasury yields were marginally lower, with investors waiting for employment data to assess the impact of the Fed’s monetary tightening campaign on the economy. The 10-year was down 1 basis point at 3.961%.

In commodities, gold prices rose, putting them on track for their best month in four, helped by a weaker dollar and expectations that major global central banks are nearing a peak with interest rate hikes. Spot gold added 0.3% to $1,965 an ounce

Oil prices rallied to a fresh three-month high and recorded their steepest monthly gains since January 2022, supported by signs of tightening global supply and rising demand through the rest of this year.

U.S. crude rose 1.63% to $81.89 per barrel and Brent was at $85.56, up 0.67% on the day.

Reporting by Lawrence Delevingne in Boston and Nell Mackenzie in London; Editing by Nick Macfie, Will Dunham and Deepa Babington

https://www.reuters.com/markets/global-markets-wrapup-1-pix-2023-07-31/