Oil News: WTI Rejected at 50-Day MA, Pressured by Iran Deal, OPEC Production

U.S. import prices unexpectedly rose in April as a surge in the cost of capital goods offset cheaper energy products.

Import prices gained 0.1% last month after dropping 0.4% in March, the Labor Department's Bureau of Labor Statistics said on Friday. Economists polled by Reuters had forecast import prices, which exclude tariffs, would decrease 0.4%. In the 12 months through April, import prices edged up 0.1%.

Data this week showed benign consumer and producer price readings in April. Economists expect the impact of President Donald Trump's sweeping import duties to become evident in inflation data by the middle of this year.

The tariffs have raised fears of a slowdown in global growth, contributing to a dampening of oil prices.

Federal Reserve Chair Jerome Powell warned on Thursday that "we may be entering a period of more frequent, and potentially more persistent, supply shocks - a difficult challenge for the economy and for central banks."

Economists expect the U.S. central bank will resume cutting interest rates either in September or December. The Fed left its benchmark overnight interest rate in the 4.24%-4.50% range earlier this month.

Imported fuel prices fell 2.6% in April after decreasing by 3.4% in March. Food prices were unchanged after dipping 0.1% in the prior month. Excluding fuels and food, import prices shot up 0.5%. That followed a 0.1% dip in March. In the 12 months through March, the so-called core import prices increased 0.8%. Prices for imported capital goods jumped 0.6%, while those of consumer goods excluding motor vehicles increased 0.3%. Prices for imported motor vehicles, parts and engines rose 0.2%.

The weakness of the dollar is likely contributing to the firmness in these import prices.

Trump's aggressive trade policies have rattled investors' confidence in the dollar, leading to a sharp fall in U.S. assets. The trade-weighted dollar is down about 5.1% this year, with most of the depreciation occurring in April.

Source: Yahoo Finance

The underlying U.S. economy is more resilient to tariff-fueled pressures than investors give it credit for, according to analysts at BofA.

In a note to clients, the brokerage said that, while they have downgraded their forecasts for U.S. growth, they do not anticipate the world’s largest economy will slide into a recession because of U.S. President Donald Trump’s aggressive trade agenda.

"Despite the massive tariff hikes in early April, we stayed relatively sanguine because we anticipated de-escalation, along with fiscal easing, down the line," the analysts wrote.

Trump and U.S. officials have eased back from recently-punishing levies in recent days.

On Monday, the U.S. and China agreed to lower tit-for-tat tariffs and temporarily delay their respective levies for 90 days.

The move came after Trump slapped soaring duties of at least 145% on China, leading Beijing to respond with its own retaliatory tariffs of 125%.

Following the deal, the U.S. tariffs on China were brought down to 30%, folding in a baseline 10% levy and separate 20% duties related to Beijing’s alleged role in the flow of the illegal drug fentanyl. China, meanwhile, cut its tariffs on U.S. items to 10%.

Trump also previously announced -- and then paused -- so-called "reciprocal" tariffs on both friends and adversaries in April.

The BofA analysts said the so-called "Trump put" -- or the belief that the president will intervene to turn around falling markets -- was triggered. Deep ructions shook the stock and bond markets after Trump first instituted his elevated tariffs on April 2, and the president later noted these jitters as a factor behind his decision to postpone the duties.

However, the level at which the Federal Reserve will step in to prop up markets is "much lower", the BofA analysts said. Since January, the strategists have projected that the Fed will not slash interest rates this year.

"This is partly because our read on the underlying health of the economy, and the Trump administration’s response suggests there won’t be a recession," they wrote. "But we also think the markets’ view on the Fed reaction function is too dovish."

The Fed cannot afford to cut rates preemptively while inflation continues to overshoot its 2% target level and there are lingering risks of increased unemployment, the analysts said.

Source: Investing

Asian markets ease despite strong weekly gains

Early trade cheer gives way to weekend caution

​Bonds rally as US data disappoints

​Commodity prices stabilise

​Political risk remains a key overhang

​Looking ahead

Source: ig

Oli prices were up on Friday after losses were recouped from the previous day and are on track for a second consecutive weekly gain, buoyed by hopes of trade tension between the US and China continuing to thaw.

Brent, the benchmark for two thirds of the world's crude, was up 0.46 per cent to $64.83 a barrel at 3.04pm UAE time. West Texas Intermediate, the gauge that tracks US crude, added 0.44 per cent to $61.89 per barrel.

Crude fell by more than 3 per cent on Thursday on the back of expectations of a possible nuclear deal between the US and Iran that could result in Tehran boosting oil supply to the market if sanctions are eased.

Brent and WTI are on track to post a 1 per cent weekly gain. Year-to-date, the benchmarks are down by about 14 per cent, weighed down particularly by the sweeping tariffs announced by the US last month.

The market has been "awaiting news on a potential US-Iran nuclear deal and developments on US tariff negotiations with trading partners around the world, with a particular focus on the talks with China that began this week", analysts at Vanda Insights said.

The US and China, the two main protagonists in the tariff war, agreed to a 90-day trade truce after a much-anticipated meeting in Geneva last weekend.

The world's two biggest economies and users of crude imposed significant drops to the tariffs they had imposed on each other for a period of 90 days, "recognising the importance of their bilateral economic and trade relationship to both countries and the global economy", a joint statement released by the White House read.

Oil prices, however, continue to be weighed down by the possibility of Opec+ increasing its output and a nuclear deal between the US and Iran.

US President Donald Trump, who wrapped up his Middle East tour in Abu Dhabi, had earlier said Washington was close to reaching a deal with Tehran.

Iran is Opec’s third-largest oil producer, with an output of 3.3 million barrels per day as of April, according to the latest monthly oil market report by the oil producers' group.

If a deal is reached between the two countries, it could lead to a boost in supply from Iran, based on the prospect of sanctions relief.

Meanwhile, Opec plans to boost output in anticipation of higher demand are also weighing on oil prices.

The alliance of producers, including Saudi Arabia and Russia, this month agreed to increase production by 411,000 barrels per day for a second month in a row in June after deciding to add the same volume to the market in May.

On Thursday, the International Energy Agency boosted its global supply growth forecast for 2025 by 380,000 bpd, while anticipating a surplus for 2026.

Investors are awaiting clues from the US Federal Reserve on potential interest rate cuts, which are expected to boost the American economy, its consumers and energy demand.

Source: THENATIONALNEWS

source : marketscreener

A batch of US retail earnings reports in the coming week is set to shed more light on the economic fallout from the shifting tariff backdrop and test the stock market's sharp rebound.

Results from retailers including Target, Home Depot and Lowe's arrive as investors have become less worried that US President Donald Trump's tariffs will send the economy into a recession, particularly following the recent US-China trade truce between the world's two largest economies.

But a warning from Walmart on Thursday that the world's largest retailer will have to start raising prices due to the high tariffs is putting other retailers in the spotlight, as investors watch how they are reacting to a trade backdrop that remains in flux.

"Retailers are going to be incredibly important, especially after what happened with Walmart's announcement," said Matthew Maley, chief market strategist at Miller Tabak.

Maley said it was notable that Walmart's warning followed news of the US-China truce, in which both sides are reducing their extra tariffs that had exceeded 100% for 90 days.

That Walmart is "still warning about the tariffs that will be put in place, even though they won't be some of the most severe ones that everybody was worried about, obviously that raises some concerns", Maley said.

The potential for tariffs to raise prices that could slow consumer spending or drive up inflation has worried investors, particularly since Trump's April 2 "Liberation Day" announcement of sweeping levies on imports.

The retailers' quarterly reports also will offer the latest glimpse into the health of consumer spending, which accounts for more than two-thirds of US economic activity.

Data on Thursday showed US retail sales growth slowed sharply in April as the boost from front-loading purchases ahead of tariffs faded, while consumer sentiment and other surveys have been weak.

"Sentiment is pretty sour," said Jack Ablin, founding partner and chief investment officer at Cresset Capital. "But what we have to do is find out if households are really following through and pulling back on spending."

Results in the coming week also include apparel maker Ralph Lauren and off-price retailer TJX Cos, with the various reports offering insight into a number of consumer segments, investors said.

One topic of interest is whether shoppers will "trade down" to less expensive items "because people are nervous about rising prices", said JJ Kinahan, CEO of IG North America and president of online broker Tastytrade.

Stocks have staged a massive recovery since Trump's April 2 announcement set off extreme volatility and sent stocks plunging. The benchmark S&P 500 index is up over 18% from its April closing low and has erased its losses for the year.

The stock market "just continues to bounce back", Kinahan said.

Source: Theedgemarkets