July 11. Brent fell to $103.70 per barrel

Oil prices were actively declining during Monday's trading, reaching a local low at $103.70 per barrel. The pressure on the asset was exerted by news about the increase in the incidence of coronavirus in China. During the day, Brent managed to recover to $106.80 per barrel.

According to official data, 352 new cases of Covid-19 were detected in China on Sunday. As a result, the authorities of several large cities have re-introduced strict restrictive measures in order to prevent the further spread of infection. And this, according to analysts, may lead to a reduction in fuel demand in the world's largest oil importer.

In addition, the focus of the markets this week is the visit of US President Joe Biden to Saudi Arabia. Biden intends to meet with the Crown Prince of the country, as well as with the leaders of other Arab countries, including Egypt, Jordan, Iraq and the United Arab Emirates.

The meeting will address the issue of increasing oil production in the region. However, even if the participants decide to increase production, this will have an extremely insignificant impact on the dynamics of the market, since the reserve capacities of the OPEC states are limited.

July 13. The Central Bank of South Korea raised the rate by 50 bp at once

For the first time in history, the Bank of Korea decided to raise the key rate by 50 basis points at once to combat high inflation. Now the rate is now 2.25% per annum. After the announcement of the regulator's decision, the exchange rate of the South Korean won rose against the US dollar by 0.6%. However, the currency still remains near the lowest in 13 years.

The rate has been increased for the sixth time since August 2021 and the pace of its rise has become the highest since the adoption of the key rates policy by the regulator in 1999. Analysts are confident that the central bank will continue to tighten policy in the coming months.

The chairman of the central bank of the country, Chanyon Ri, said that the non-standard decision on the rate was made unanimously, however, if the inflation curve follows the projected trajectory, further rate increases will be the usual 25 bps.

Inflation in South Korea in June was 6% in annual terms, which was the highest since November 1998. This year, inflation is expected to exceed the previous forecast of 4.5%. At the same time, the regulator presented a worsened forecast for GDP in 2022: it is expected that the rise will be weaker than 2.7%, which were predicted earlier.

July 20. Oil is moderately cheaper in the middle of the week

Oil quotes are moderately declining on Wednesday after yesterday's growth to the highest since the beginning of July.

On July 18 Brent was trading near $99.65 per barrel, then on the 20th the asset sharply strengthened to $107.60. The current quote is $105.57 per barrel.

North American WTI oil shows similar dynamics: a decline to $98.94 per barrel after rising to a maximum of $100.55. The current WTI quote is $99.10 per barrel.

Fears that the actions of the US administration to combat climate change will negatively affect oil production in the country contributed to the growth of both assets. Yesterday, US President Joe Biden promised to take decisive measures on the part of the executive branch in order to combat climate change and support renewable energy. However, the president did not specify the details, which caused a wave of concerns among market participants.

Previously, the environmental measures of the authorities included reducing the area of territories adapted for oil and gas production.

Today, yesterday's data from the American Petroleum Institute put pressure on Brent and WTI. The report showed that the growth of crude oil reserves in the United States last week amounted to 1.5 million barrels, which was higher than the projected 400 thousand barrels. Today, we should pay attention to similar statistics from the US Department of Energy – if official data confirm the growth of hydrocarbon reserves, oil quotes will continue to decline.

July 26. Gas prices in Europe jumped above $1,900

According to the London ICE exchange, gas prices in Europe are rising moderately on Tuesday and are holding above $1,900 per thousand cubic meters.

The cost of «blue fuel» jumped sharply yesterday after Gazprom announced plans to reduce supplies via the key Nord Stream gas pipeline from Russia to Europe. According to the plan, from June 27, the pipeline will pass no more than 33 million cubic meters per day, which is only 20% of the nominal capacity of the main line.

Analysts believe that exchange prices for gas in Europe may exceed $2,000 per thousand cubic meters for the first time in four months. The last time the cost of gas exceeded this mark was in early March – then gas quotes approached the $4,000 mark due to fears of a ban on Russian energy resources.

The estimated gas price on the European stock exchange in July averages $1,742 per thousand cubic meters. This is several times higher than in the same period last year. Experts note that there have not been such consistently high prices in the entire history of the operation of gas hubs in Europe – since 1996.

July 25. Brent fell below $98 per barrel

World oil prices continue the decline, which began at the end of last week. The current Brent quote is $97.66 per barrel.

Pressure on the commodity asset is exerted by traders' concerns about the prospects for economic growth and demand for energy resources in the world in conditions of high economic uncertainty. The fact is that the world's central banks are aimed at curbing the acceleration of inflation, which can lead to a recession.

The focus of the markets in the last trading week of July is the meeting of the US Federal Reserve System, which is likely to be another reminder of the economic difficulties in the country and in the world. The results of the meeting will be published on Wednesday, and most analysts expect another rate hike by 75 basis points, to 2.25-2.5%.

As for demand, analysts believe that oil demand may exceed expectations even in the event of a weakening of the US economy. The fact is that consumption growth in recent years has lagged behind the average level for 40 years due to coronavirus restrictions and should return to normal levels.

In general, despite the local decline, the oil market is likely to continue to grow in the coming weeks, given the beginning of the hurricane season, which may limit production in the Gulf of Mexico. And this traditionally pushes oil prices up.

August 8. The oil market remains under pressure

Yesterday, oil prices again showed a decline in the area of multi-month lows – to the level of $93.20 per barrel. Today, Brent crude managed to recover to the level of $94.25.

Pressure on the oil market continues to be exerted by investors' fears that rising interest rates and a slowdown in the global economic recovery will have a significant negative impact on demand.

The worries of market participants intensified yesterday after the Bank of England decided to raise the base interest rate to 1.75% from 1.25% per annum, at a record pace since 1995. At the same time, the British regulator noted that it expects a decline in the UK economy in the fourth quarter of 2022, and this decline will last throughout 2023.

However, a number of analysts believe that it is too early to say that the world economy is in recession. Moreover, sharp fluctuations in the oil market due to the current global economic conditions make it difficult to forecast a deficit or surplus of production for 2022.

On August 3, OPEC+ decided to increase oil production in September by 100,000 barrels per day, and this decision is aimed at studying the market reaction and may be revised.

August 10. Crypto market news

Bitcoin has sharply increased in price by $1.000 and exceeded the level of $24.000 after the release of inflation data in the United States. The current BTC quote is $24.077, over the past day the cryptocurrency has risen in price by 3%. The cost of bitcoin increased after the US Department of Labor reported an increase in consumer prices in the country by 8.5% year-on-year in July.

The Coinbase crypto exchange recorded a loss of $1.1 billion in the second quarter. This became known from the company's financial report. Coinbase has suffered due to a sharp decline in trading volumes caused by the collapse of cryptocurrency quotes in recent months. In particular, the price of bitcoin has dropped by almost 70% from the historical maximum set in November 2021.

The developers of the Phantom cryptocurrency service announced the results of an investigation into the hacking of 9230 Solana wallets and the theft of $4.08 million in cryptocurrency that occurred on August 3. The representatives of the project found out that all the affected addresses were related to the Slope mobile application – they were created, imported or used in it. Further investigation is ongoing.

In China, more than 12 thousand accounts in local social networks were blocked, the owners of which promoted and advertised the cryptocurrency. Also, Chinese web platforms have deleted more than 51 thousand posts with illegal advertising of earnings through investing in bitcoin.

The Robinhood cryptocurrency service, by court decision, will pay compensation totaling $9.9 million to all users affected by platform outages in 2020. Then the blocking of traders' operations led to significant losses, as at the same time the financial markets showed record growth results.

August 15. The European market is growing at the beginning of the week

European stock indexes are growing moderately at the beginning of a new trading week. And investors continue to analyze weak statistics on the Chinese economy.

The German DAX index is trading near the values of the previous session (13.786,72). The CAC 40 in France rose 0.2% to 6,533.12 points, and the British FTSE 100 was trading 0.2% higher than the previous close at 7,539.65.

Economic data from China showed that the pace of economic growth in the country unexpectedly slowed in July, which forced the central bank of China to reduce the key lending rate from 3.70% to 2.75%. Industrial production in July increased by 3.8% compared to a year earlier, but the growth rate was lower than the expected 4.6%. Retail sales increased by 2.7% compared to a year earlier, while failing to meet forecasts of 5.0% growth and 3.1% growth observed in June.

In Europe, the European Central Bank raised interest rates by half a point in July and is expected to do the same in September. The tightening of the ECB's monetary policy comes despite the fact that the risk of recession in the eurozone has reached its highest level since November 2020. And all because of record inflation against the background of a shortage of energy carriers.

Corporate news of European companies

Shares of AstraZeneca PLC rose 2.6% after the drugmaker announced that its anti-cancer drug Enhertu slowed the progression of a form of breast cancer in previously treated patients.

Shares of Henkel AG & Co. Stocks rose 0.4% after the German consumer goods company reported that its sales volume increased in the first half of the year, but profits declined due to rising prices for raw materials and logistics.

August 17. Macroeconomic events of the day | August 17

New Zealand

The Central bank of New Zealand has introduced a policy to combat high inflation in the country, increasing the interest rate by 0.50 basis points – from 2.5% to 3%. This is the fourth year that the New Zealand central bank has raised interest rates.

Great Britain

Inflation in the UK reached double digits for the first time in 40 years: consumer prices rose by 10.1% in annual terms in July. Analysts note that the last time inflation in the UK was above 10% was in 1982. Compared to June, consumer prices increased by 0.7%. At the same time, economists predicted an increase in annual inflation to 9.8%.

Eurozone

According to the second estimate of the European statistical agency Eurostat, the GDP of 19 eurozone countries in the second quarter of 2022 grew by 3.9% year-on-year and by 0.6% quarter-on-quarter. Analysts expected growth of 4% in annual terms and 0.7% in quarterly terms.

The United States

According to the US Department of Commerce, the volume of retail sales at the end of July remained at the level of the previous month – 0.8%. At the same time, analysts expected sales to increase by an average of 0.1%. On a monthly basis, sales increased by 0.7% (excluding gasoline and car sales from calculations).

Oil

According to the official report of the US Department of Energy, commercial oil reserves in the country decreased by 7,056 million barrels per week after an increase of 5 million a week earlier.

August 19. The dollar index rose to highs on the signals of the US Federal Reserve

On Friday, the US dollar shows strengthening to a one-month high in pairs with major competitor currencies. The dollar index is currently 0.17% higher than Thursday's closing level (107.65); the maximum value of the USDX index was reached on July 18 at 107.72.

The US currency is supported by statements by the heads of the US Federal Reserve on the need for further interest rate increases. Next week, the central bank's symposium will be held in Jackson Hole, and it is expected that representatives of the regulator will give new signals about the dynamics of monetary policy.

Earlier, the president of the Federal Reserve Bank of St. Louis, James Bullard, said that he was leaning towards a third consecutive increase in the key rate by 75 basis points at the Fed meeting in September. His colleague from San Francisco, Mary Daly, also believes that an increase of 50 or 75 points would be quite reasonable. Other representatives of the Federal Reserve are also confident that it is too early to ease monetary policy, since inflation is still at record levels.

Additional support for the dollar was provided by yesterday's data on the labor market in the United States. The number of initial applications for unemployment benefits decreased by 2 thousand from the revised figure of the previous week – to 250 thousand. Unemployment in May remained at the April level of 3.6%, and the number of people employed in non-agricultural sectors of the economy increased by 390 thousand people.

The USD/JPY pair has risen to a maximum since July 28 (136.69) and is preparing for the strongest weekly growth since June 10. EUR/USD is still sideways near the level of 1.0086, and the GBP/USD pair has fallen to a minimum since July 21, 1.1895.

August 23. Business activity in the eurozone falls for the second month in a row

According to preliminary data from the research organization S&P Global, the composite purchasing managers index (PMI) of 19 eurozone countries in August continues to remain below the level of 50 points – the bar separating the growth of business activity from the fall. The indicator decreased from 49.9 points in July to 49.2 points, that is, business activity in the region is falling for the second month in a row.

Nevertheless, the indicator turned out to be higher than the expectations of market participants (49 points).

The indicator of activity in the service sector decreased to 50.2 points (from July 51.2 points), while updating the minimum since April 2021.

The manufacturing PMI fell to 49.7 (from 49.8 points), reaching the lowest value since June 2020.

Germany's composite PMI in August fell to 47.6 points (from 48.1 points), also to the lowest since June 2020. The indicator in the service sector fell to 48.2 (from 49.7 points), while in industry the indicator rose to 49.8 points from 49.3 points a month earlier.

France's composite PMI was 49.8 points compared to July's 51.7 points. The index of business activity in the service sector decreased to 51 from 53.2 points, in the manufacturing industry – to 49 from 49.5 points.

The UK composite PMI in August, although it remained above 50 points, but fell to the lowest since 2021 – 50.9 points from 52.1 points a month earlier. The indicator in the services sector has updated at least in 1.5 years (52.5 points), and in the manufacturing industry – it turned out to be at the lowest level in 27 months (46 points).

August 26. Macroeconomic events of the day | August 26

On Friday, all the attention of the markets is focused on the speech of the head of the US Federal Reserve Jerome Powell at the symposium in Jackson Hole. It is expected that the regulator will confirm its intention to curb inflation, but will not announce the details of its next steps. Many expect an interest rate increase of another 0.75 percentage points in September, while others expect a smaller increase, by half a point.

Powell's speech will take place after the publication of a block of economic data, including on the PCE index, as well as on the expenses and incomes of Americans.

PCE Index

The Personal Consumption Expenditure Index (PCE), the Fed's most preferred inflation indicator, will be published at 12:30 GMT. Analysts expect the underlying PCE to increase by 4.7% compared to last year and by 0.3% compared to the previous month.

Expenses and incomes of Americans

At the same time (12:30), statistics on personal expenses and incomes of Americans will be published. Personal expenses are projected to grow by 0.4% and personal income by 0.6%.

It is noted that middle- and low-income households feel disadvantaged due to rising prices for all basic goods, so they are forced to reduce their expenses. At the same time, retailers are lowering prices to get rid of inventory in preparation for the holiday season.

Powell's performance at Jackson Hole

Despite general expectations, the speech of the head of the Fed is unlikely to bring any specifics to the market. Moreover, before the regulator announces its next decision on the rate, several more important economic data will be published, including inflation and the employment report.