Oil moved sharply lower during Asian hours, both Brent and WTI futures fell to lows not seen in around a month. Driving the move was … well, no fresh catalysts were evident. The usual suspects were all cited but none of these are particularly fresh:
- recession fears (and thus demand destruction)
- China demand still languishing as the country addresses COVID in its very strict manner
- Discussions are proceeding on capping the price of Russian oil
- OPEC to increase production beyond the 400K-odd bbls per day
- US President Biden is to meet with oil producers, but, again, this is nothing really new. Biden is also scheduled to speak on Wednesday at 2pm Eastern time US, where he is expected to announce a cut to gasoline tax. If anything this is bullish (the transmission mechanism on this goes something like: lower cost to drive → more driving → more demand → higher oil price).
Added … while there were no fresh news catalysts these are not always needed to move markets. Oil’s move today seems more about taking out some longs, decent size longs. The arguments for higher oil have been around for a while too and longs have been richly rewarded. Sometimes though its time to take out some stops and for the bidders to shut their wallets for better rates.
CAD lost ground as oil dropped.
We heard, again, from Federal Reserve Bank of Richmond President Thomas Barkin. Barkin had spoken earlier on Tuesday during US time and spoke again during the Asian morning. He continued his theme of flagging a 75bp rate rise from the FOMC at the July meeting.
Also on the central bank front were the minutes of the Bank of Japan April meeting published today. As I noted in the posts (and do so every day when BOJ minutes are scheduled) the minutes are very, very stale, being preceded by the BOJ ‘Summary of Opinions’ from the meeting by around 6 weeks! Links to the Summary in the bullets above. USD/JPY lost ground during the session, retracing some of Tuesday’s big gain.
Elsewhere the USD was on the bid side. EUR, GBP, AUD, NZD have all dropped away during the session.
Chart shows hourly candles for WTI futures. Today’s downmove carries on its trend of the past week or so: