Oil Falls as OPEC+ Weighs Another Major Production Increase

Commodity

Summary:

The bearish OPEC+ development overshadowed earlier news that China is assessing the possibility of talks with the US that could ease the trade conflict between the two economic giants.

Oil slumped as OPEC+ discussed making a second major production increase, inflaming concerns about swelling global supplies that have dragged down crude prices this year.

West Texas Intermediate futures fell almost 2% to trade around $58 a barrel, continuing a slide this week that has brought prices near the lowest since early 2021. Key OPEC+ nations are considering another production increase of about 400,000 barrels a day in June ahead of a meeting the group pushed forward two days to May 3.

Another aggressive supply boost from the cartel threatens to batter a market already pressured by soft Chinese demand and plentiful output from outside the group. The increase would be in line with figures previously telegraphed by the group and roughly matches last month’s shock hike, which was seen as a bid to discipline over-producing members.

“OPEC’s decision framework appears to be fueled by the persistent cheating, particularly from the likes of Iraq, Kazakhstan, Russia among others,” TD Cowen strategists including Dan Ghali and Bart Melek said in a note to clients. Inventories may increase by about 200 million barrels over the next three quarters, which could drop crude toward the low $50s, they wrote.

Crude has shed about 19% this year — and briefly touched a four-year low last month — as the Trump administration’s tariffs fan concerns that energy demand will fall.

The drop in prices is already showing signs of squeezing a key industry that US President Donald Trump pledged to help. Some of the biggest US shale-oil producers plan to slash about 4% of their drilling rigs by the end of the year. Chevron Corp. said on an earnings call on Friday that it would reduce share buybacks, citing a softening market.

The bearish OPEC+ development overshadowed earlier news that China is assessing the possibility of talks with the US that could ease the trade conflict between the two economic giants. The Wall Street Journal reported later that China had approached the Trump administration to ask what changes the US was seeking in relation to the production of precursor chemicals that are used to make fentanyl.

Limiting crude’s losses was Trump’s pledge to impose secondary sanctions on any nations or companies buying Iranian oil, ratcheting up pressure on Tehran as nuclear talks with Washington hit a snag. The vow follows a similar move in early March to place “secondary tariffs” on countries that obtain oil from Venezuela.

Top buyers of crude from the targeted nations, like China and India, are also the epicenters of the US-led trade war, meaning the indirect penalties may exacerbate economic strain from Beijing to New Delhi.

Source: Bloomberg

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Damon

Economic

Trump made the announcement after weeks of threatening a change to the school’s tax-free treatment. “We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!” Trump wrote in a post early Friday morning.

Harvard maintained there’s “no legal basis” to rescind its tax-exempt status and Trump’s announcement sparked swift criticism. Rep. Richard Neal, the ranking Democratic member on the House’s tax-writing committee, described the move as illegal and said the president was weaponizing the Internal Revenue Service.

Four Democratic Senators, including Elizabeth Warren of Massachusetts, called early Friday for an investigation of whether Trump’s targeting of Harvard violates a criminal law barring the president from ordering the IRS to punish his political opponents or reward his allies.

Under federal law, the president, vice president or their employees cannot direct an IRS official to “conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer.”

As of Friday morning, it was unclear if Trump’s announcement stemmed from his decision or that of the tax agency.

“I can’t understand how the president is operating as if he has the power to direct this. He doesn’t and is specifically prohibited from doing this,” said Steven Bloom, assistant vice president for government relations at the American Council on Education.

The power to revoke tax benefits lies with the IRS and it’s a lengthy process that begins with an examination, he said. Harvard would also have the opportunity to remedy any issues, according to Bloom.

Tenenbaum Law Group, a Washington, DC-based law firm that represents nonprofits, said in an April 28 report that federal tax-exempt status cannot be taken away with a “stroke of a pen.”

“Those procedures require individual case-by-case IRS audits of each organization, with ample opportunity for the entity to defend itself, and including multiple routes of appeal,” the law firm said.

Source: Yahoo Finance

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Adam

Economic

China–U.S. Trade War

A tale of two different technology companies is playing out this earnings season as President Donald Trump’s global trade upheaval makes planning nearly impossible.

Businesses reliant on advertising appear to be holding on for the near-term as those dependent on consumer spending have started to feel the cracks of a murky macro subjected to an ever-shifting tariff policy.

Block offered a lackluster second-quarter profit outlook in its earnings release Thursday, and said it took into account a “more cautious stance” into the end of the year. Airbnb issued disappointing guidance and said its business experienced some “softness” in travel from Canada to the U.S. toward the end of the quarter.

“In the U.S., we’ve seen relatively softer results, which we believe has been largely driven by broader economic uncertainties,” the vacation rentals company said in a letter to shareholders.

The fortress technology giants are also proving susceptible to Trump’s whims.

Apple CEO Tim Cook said Thursday that the company anticipates $900 million in added costs from tariffs this quarter, but said it’s “very difficult” to predict beyond that timeframe due to uncertainty.

He also said Apple is sourcing products shipped to the U.S. from India and Vietnam — where tariffs are lower.

“We do expect the majority of iPhones sold in the U.S. will have India as their country of origin,” he said. “Vietnam will be the country of origin for almost all iPad, Mac, Apple Watch and AirPods products sold in the U.S.”

Amazon’s e-commerce business, which relies on many sellers that ship from China, is also beginning to feel the pressure. The company issued light guidance for the current quarter, and said “tariffs and trade policies” and “recessionary fears” were factors in its outlook.

Trump recently hiked the import duty on goods from China to 145%. Amazon is also grappling with the expiration of the de minimis loophole that previously allowed imports under $800 to enter the U.S. duty free.

Finance chief Brian Olsavsky said the company offered a wide guidance range due to tariff unpredictability.

But Amazon’s advertising business was a silver lining in the report, jumping 19% from last year. Other ad-heavy businesses also reported strong results in this macroeconomic setup, but warned of possibly tougher waters ahead.

Alphabet reported a year-over-year jump in ad revenue, but warned that the de minimis changes would “cause a slight headwind” to its ad business this year, particularly in Asia. Meta’s ad revenues topped estimates, but finance chief Susan Li said some Asia e-commerce retailers have curbed ad spending. ”

“A portion of that spend has been redirected to other markets, but overall spend for those advertisers is below the levels prior to April,” she said.

Worsening consumer sentiment isn’t just a tech problem. Airlines, restaurants and consumer retailers are also feeling the pinch.

Delta Airlines cut its growth plans for 2025 and trimmed its first-quarter guidance on weakening demand, while Chipotle Mexican Grill blamed a “slowdown consumer spending” as a reason for a decline in same-store sales.

U.S. consumers also appear less optimistic about the economy. Last month, the expectations index from the Conference Board’s consumer confidence survey fell to its lowest level since October 2011.

Board officials said the reading is consistent with a recession.

Source: cnbc

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Adam

Stocks

The Federal Reserve meeting in the coming week is set to test the U.S. stock market's sharp rebound, with investors hoping the central bank is poised to resume lowering interest rates in the months ahead.

During the rally, stocks have erased the slump set off by President Donald Trump's sweeping tariffs. The S&P 500 was last little changed since April 2, when Trump's "Liberation Day" tariff announcement sent stocks plunging and led to some of the market's most volatile swings in 50 years.

While the Fed is widely projected to hold borrowing costs steady in its monetary policy statement on Wednesday, market pricing indicates expectations that the central bank could cut as soon as June, although odds of such a move dimmed following Friday's solid U.S jobs report.

"The Fed is one of the few levers that can be pulled in a timely fashion that can support market activity," said Dominic Pappalardo, chief multi-asset strategist at Morningstar Wealth. "If they start to signal that their inflation concerns are waning, that suggests they are closer to a cut, and I think that will be well received by markets."

Trump's tariffs loom over policy decisions for central bank officials weighing concerns about a potential economic downturn against worries that tariffs will drive inflation higher.

Data this week showed the U.S. economy contracted in the first quarter for the first time since 2022, but many analysts discounted the report, saying the weakness was driven by a surge in imports as businesses sought to avoid higher costs from tariffs.

After cutting by 1 percentage point last year, the Fed has held its benchmark rate at 4.25%-4.5% so far in 2025. Fed funds futures are factoring in at least three more 25-basis point cuts by December, according to LSEG data. The amount of expected easing this year fell modestly after data on Friday showed U.S. employment increased by a higher-than-expected 177,000 jobs in April.

The White House has raised pressure on the central bank to cut rates, with Trump harshly criticizing Fed Chair Jerome Powell, who has said the Fed would await more data on the economy's direction before changing rates.

Last month, Trump raised the possibility he would seek to fire Powell, setting off market worries about damage to the Fed's independence. Trump later appeared to back off.

At next week's meeting, Powell "might continue to sound hawkish to push back on the narrative that the Fed is going to be influenced by the White House," said Angelo Kourkafas, senior investment strategist at Edward Jones.

Even after eight straight sessions of gains, and on pace for a ninth on Friday, the S&P 500 remains down about 8% from its February record high. Last month, the benchmark index dropped nearly 20% below that peak.

Corporate results reports over the past few weeks have generally exceeded expectations. With about two-thirds of the S&P 500 having reported, companies in aggregate are posting earnings 7.4% above expectations versus a long-term average of 4.3% above estimates, according to LSEG IBES.

Shares of megacaps Microsoft and Facebook parent Meta Platforms gained on Thursday after their results, boosting equity indexes. Results in the coming week include Uber Technologies, Walt Disney and ConocoPhillips .

Trade developments will remain in focus, with investors saying the market's rebound came on optimism that tensions were easing and that deals with other countries were progressing. Trump on April 9 paused hefty import levies on many countries for 90 days, as the U.S. negotiates with other countries. That move sent stocks soaring.

"The market wants to see, and expects to see, some solid signed deals with some of our trading partners," said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.

"The market is anticipating something, and it's time for the rubber to hit the road."

Source: Reuters

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Adam

Commodity

Oil prices fell 1% on Friday and were set for their biggest weekly losses since the end of March, as traders turned cautious ahead of an OPEC+ meeting to decide the group’s output policy for June.

Brent crude futures were down 65 cents, or 1.1%, to $61.48 a barrel at 11:57 a.m. ET (1557 GMT), while U.S. West Texas Intermediate crude futures fell 79 cents, or 1.3%, to $58.45 a barrel.

For the week, Brent was on track to fall about 8% and WTI about 7%.

The OPEC+ meeting was moved up to Saturday from the original plan of Monday, three sources told Reuters on Friday, although it was not immediately clear why the meeting was rescheduled.

Members of the group, which includes the Organization of the Petroleum Exporting Countries and its allies, are deliberating whether to make another accelerated oil output increase in June or stick with a smaller hike, two of the sources said.

Either way, oil traders braced for more supply from the group, at a time when fears of an economic slowdown caused by a trade war between the U.S. and China have prompted market experts to lower demand growth expectations for this year.

"This market is all about OPEC now with even the tariff war taking a back seat," United ICAP (LON:NXGN) energy specialist Scott Shelton said.

Reuters reported this week that officials from Saudi Arabia, the de facto leader of OPEC+, have briefed allies and industry experts that they are unwilling to prop up oil markets with further supply cuts.

OPEC+ is currently cutting output by over 5 million barrels per day.

Traders were also cautious given the possibility of a de-escalation of the trade dispute between China and the United States, after Beijing on Friday said it was evaluating a proposal from Washington to hold talks to address U.S. President Donald Trump’s tariffs.

"There is some optimism when it comes to U.S.-China relations but the signs are only very tentative," Harry Tchilinguirian, group head of research at Onyx Capital Group, said. "It’s still very fluid, a one step forward, two steps back situation when it comes to tariffs."

Friday’s oil price decline was kept in check by rising equity markets, UBS analyst Giovanni Staunovo said, as Wall Street climbed after U.S. jobs data showed payrolls increased more than expected last month.

A threat by Trump on Thursday to impose secondary sanctions on buyers of Iranian oil also helped ease some of the pressure on oil prices, as it could tighten global supply.

The threat, which came after U.S. talks with Iran over its nuclear programme were postponed, could also complicate trade talks with China, which is the world’s largest importer of Iran’s crude.

Source: investing

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Fiona Harper

Cryptocurrency

What to Know:

● Bitcoin price hits a 10-week high following rate cut demand.

● Bitcoin price increases linked to Trump's rate cut call.

● BlackRock's ETF sees the largest 2025 inflow at $1.5 billion.

Bitcoin Surges as Trump Urges Federal Reserve Rate Cut

Bitcoin has surged over 3% to its highest level in 10 weeks, reaching $97,483, as former US President Donald Trump pressures the Federal Reserve for a rate cut.

The surge in Bitcoin prices underscores increased market volatility and institutional activity, with significant ETF inflows intensifying interest and liquidity in cryptocurrency markets.

Bitcoin Hits 10-Week High Following Trump's Rate Comments

The cryptocurrency market saw significant movement as Bitcoin surged to $97,483, a 10-week high. Former President Trump criticized Fed Chair Jerome Powell for maintaining high interest rates, calling for urgent economic adjustments. In his words, "Torches Fed Chair Jerome Powell for refusing to cut rates — and hints his termination 'can’t come fast enough.'"

Trump's demand for a rate cut comes as Bitcoin and Ethereum ETFs drew substantial inflows, particularly from BlackRock, boosting market confidence and driving Bitcoin prices upward.

BlackRock ETF Inflows Hit Year High Amid Surging Bitcoin

Bitcoin's price increase reflects amplified market optimism and the role of institutional players like BlackRock whose ETF recorded a year-high intake. This trend signals a potential rise in liquidity and stability in the spot market.

The political pressure from Trump introduces a potential shift in economic policy, influencing not only financial markets but also broader economic perspectives, challenging Jerome Powell's current stance on interest rates.

Bitcoin Rally Mirrors Historic Rebounds During Political Strain

This rally mirrors past instances where Bitcoin saw strong rebounds after periods of political tension, suggesting an established pattern of recovery amidst market stress. Data supports Bitcoin’s response to political and economic uncertainty.

Historical trends imply that surpassing major psychological price levels results in momentum-driven rallies. With ETF inflows supporting volatility and engagement, Bitcoin might test new historical high ranges based on present dynamics.

Source: CryptoSlate

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Adam

Stocks

China–U.S. Trade War

While global markets have been gripped by turbulence in the wake of U.S. President Donald Trump’s seesawing tariffs policies, British stocks have enjoyed a bumper rally.

London’s FTSE 100 index, which has gained 4.8% since the beginning of the year, was 0.8% higher at 1:00 p.m. in the U.K. on Friday — putting it on track for its longest ever run of daily gains.

On Thursday, the index closed marginally higher, marking its fourteenth consecutive session of gains. This has happened only once before, in 2017, when the FTSE 100 saw fourteen back-to-back daily rises.

The FTSE 100, however, still remains below the level it was trading at before the final list of Trump’s reciprocal tariffs was unveiled.

London’s more domestically focused FTSE 250 has also been on a winning streak of late, having notched seven consecutive days of gains by Thursday’s closing bell. On Friday, the index was trading flat, paring earlier gains. If the index ends Friday’s session in positive territory, it would mark the FTSE 250′s longest run of gains since late 2020.

London-listed equities that saw the biggest gains on Friday included British food outlet operator SSP Group, up 4%, English healthcare firm Haleon, up 3.8%, and U.K.-based aerospace firm Melrose Industries, which rose by 3.6%.

Safe haven for tariffs?

When it comes to what’s fueling the rise of British stock markets, the U.K.’s unique position away from the firing line of new U.S. tariffs is part of the picture, according to Naeem Aslam, chief investment officer at London’s Zaye Capital Markets.

“The easing of U.S.-China trade tensions and the removal of tariff threats have boosted confidence, while the United Kingdom’s neutral trade status has shielded it from the more punitive levies faced by the European Union or China,” he said in an email.

The U.K. has been spared from the brunt of the Trump administration’s so-called reciprocal tariffs, and last month Vice President JD Vance said he saw a “good chance” of Britain forging a trade deal with the United States that would give the U.K. further reprieve from the duties.

“The index’s defensive giants — healthcare (e.g., AstraZeneca), energy (e.g., Shell), and consumer staples — have drawn investors seeking refuge from volatility, supported by a high dividend yield of between 3.5% and 4%,” Aslam told CNBC on Friday.

“Furthermore, robust corporate results from the likes of Whitbread (+3.4%) and Entain (+6.8%), combined with a resilient UK economy growing at an annualized rate of 1.5%, also add fuel to the rally, making the FTSE 100 a relative safe haven.”

Aslam said the FTSE 100′s upward momentum could continue if defensive stocks remain in favor — however, he noted that there were “risks abound.”

“Technical point to the index, being overbought … suggesting a pullback,” he said. “Geopolitical hotspots or revived tariff tensions may upset momentum, while a firmer pound (around $1.30) could put pressure on export-heavy members.”

However, he noted that undervaluation relative to the FTSE 100′s global peers combined with expectations of multiple interest rate cuts from the Bank of England this year, could push the index as high as 8,900 points by the end of next month — a return of around 4% from current levels.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, agreed that the blue-chip index has the potential to extend its record run.

“The FTSE 100 has significantly more power in reserve and could have further to run, given that the index is not yet regained the record levels reached in March,” she told CNBC via email on Friday.

However, she noted that uncertainty over U.S. trade policy and the extent of the effect on the global economy, had the potential to put a lid on further gains.

In a note to clients on Thursday, Bank of America strategists ranked the UK as its 10th best performing equity market with returns of 12.6% from the beginning of the year to the end of April. The top of the list was dominated by European markets including Spain, Greece and Germany, while U.S. stocks — down by around 5% on a year-to-date basis — were ranked in 20th place.

Bob Huxford, head of the public companies division at London-based communications agency SEC Newgate, told CNBC on Friday that volatility in U.S. equity markets presented British capital markets with an opportunity to regain some of the ground lost to the U.S. in recent years.

“The London market has undergone nine successive years of outflows, with 2024 the worst year on record when £9.6 billion left our shores, mostly headed for America,” he said. “Current uncertainty in the US stock market offers a chance for the UK to reverse this trend. Money is already flowing from the US, and there are a host of reasons why the UK represents a port in a storm amid the market turmoil.”