S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- WTI Oil appreciates to levels above $84.00 after bouncing off the $77.16 lows earlier this week.
- Crude prices have rallied about 7% since the US and Iran resumed hostilities on Wednesday.
- EIA reported a larger-than-expected draw in Oil reserves, increasing concerns about a Crude shortage.
Oil prices have risen about 7% over the last two days, pushing the price of the US benchmark West Texas Intermediate (WTI) barrel to levels above $84.00 on Thursday, up from the $77.16 lows seen earlier in the week. The resumption of hostilities in the Middle East and a serious threat that the war might spill over the region are adding a risk premium to Crude prices.
The US military announced a new round of strikes on Iran on Wednesday, which would end a three-day truce, and crush investors’ hopes of a negotiated outcome that had allowed for a $12 drop in Oil prices.
These strikes follow comments by US President Donald Trump vowing retaliation after a US-owned gas storage tanker was hit by a drone while anchored at Egypt’s port of Damietta. Before that, Iran had fired missiles at a US military base in Jordan, and the US and Saudi Arabilia launched a coordinated attack on Iran-backed Shiite militias in Iraq.
US Oil reserves decline beyond expectations
Meanwhile, global Oil reserves keep depleting, with the key Strait of Hormuz crossed. Data from the US Energy Information Administration (EIA) released on Wednesday revealed that US commercial Oil inventories declined by 7.167 million barrels in the week ending July 24, well beyond the 2.5 million draw expected by the market, and largely offsetting the 2.01 million barrels buildup seen in the previous week. These figures add concerns of an Oil shortage and contribute to pushing prices higher.
According to TD Securities, the “return of Iranian-US strikes after a multi-day pause, along with continued Houthi risks for Saudi energy infrastructure, are keeping flows in both the Strait of Hormuz and Bab el-Mandeb heavily constrained.” Strategists argue that markets have given up on hopes of renewed peace, considering Iran’s insistence on controlling the Strait and see ongoing disruptions leading to “reduced flows and global tightening of the energy market as supportive of further upside in crude oil.”
