Oil jumps after U.S. crude oil inventory report

Daily Analysis - 28/06/2018

Risk sentiment still off; the dollar is broadly stronger

Equity markets in Asia fell as trade tensions between the U.S. and China continue to drive sentiment. Investors are skeptical about Trump’s decision on Wednesday for a less aggressive stance on Chinese investments in the U.S. There are conflicting reports from Washington so far.

Trump administration confuses markets on Chinese investments

On Wednesday, U.S equity markets saw a modest rally and the dollar jumped against the yen on news that President Donald Trump decided not to adopt a more stringent approach on trade and limits on Chinese investments. But later, White House economic adviser Larry Kudlow said Trump’s decision did not represent a softer stance on China. The Chinese yuan slid to a new 6 month low today.

WTI oil rises to as high as $73 a barrel

Crude oil surged after EIA data on Wednesday showed a bigger than expected drawdown of 9.2 million barrels of oil for the week ending June 22. WTI jumped on the news to reach $73 a barrel by late Wednesday and is trading steadily so far today. Meanwhile, oil prices also received support yesterday on news that the U.S. State Department expects oil buyers to completely cut off purchases of Iranian supplies in early November. Iran, OPEC's third-biggest producer, exports more than 2 million barrels per day, and so Trump’s sanctions on Iran will affect global oil supply.

E.U. Summit in focus

E.U. leaders are meeting in Brussels today for a two-day Summit. The issue of migration is at the top of the agenda. Transatlantic trade relations and Brexit negotiations will also be discussed. The euro is trading below the key $1.16 level in early European trading.