Oil price falls as US releases more emergency crude reserves.
Oil prices fell on Thursday as the US announced a “historic release” of its reserves, easing pressure on the $23bn Treasury bond market, which is on track to post its worst quarterly performance ever.
Brent crude, the international oil index, fell 4.9% to $107.91 a barrel after the White House said It will release an additional million barrels a day from the state’s emergency reserves over the next six months. The release is an effort to cool oil prices that have risen since the Russian invasion of Ukraine, which has exacerbated rising inflation.
Meanwhile, the OPEC+ group of oil-producing countries said it would aim to increase output by 432,000 barrels a day in May, continuing the monthly plan agreed last year to gradually replace output cuts at the start of the epidemic.
The yield on the 10-year US Treasury bill, whose price is inverted and strengthens global fundraising costs, fell 0.03 percentage points to 2.32%.
This benchmark yield has more than doubled since hitting a low in early August, as supply chain disruptions linked to the coronavirus crisis have pushed inflation to the highest in decades.
“When oil prices go down, inflation expectations go down and that has helped push bonds higher,” said Banu Bawiya, chief strategist at UBS’s investment banking unit.
The Bloomberg Treasury Total Returns Index fell 5.6% this year as of Wednesday’s close, putting it on track to post the weakest quarterly performance since the index was established in 1973.
Germany’s 10-year yield, trading significantly below US credit rates reflecting looser monetary policy by the European Central Bank, fell 0.1 percentage point to 0.54%.
Inequity markets, Wall Street’s S&P 500, down 4% this year, was down 0.6% as of mid-afternoon Thursday. The tech-heavy Nasdaq Composite was down 0.7%, down 8% this year.
The moves came as data showed the US Federal Reserve’s preferred inflation index, the core index of personal consumption spending that excludes the volatile food and energy sectors, rose 0.4% in February. compared to the previous month. 5.4%: the fastest rate in about 40 years.
European stocks fell on Thursday as the Stoxx 600m lost 0.9%. The drop reduced the regional index by 6.4% in the first three months of 2022, marking the worst quarter in two years. The UK’s FTSE 100 closed down 0.8 percent on the day but was up 1.8 percent on the quarter.
Oil prices have risen nearly 40 percent in 2022, a higher stimulus Because of Moscow’s invasion of Ukraine and Western sanctions on exports from Russia, which is the third-largest oil producer in the world behind the United States and Saudi Arabia.
The release of a 180 million-barrel U.S. stockpile would reduce the amount of “price-driven price destruction” needed to restore the balance between supply and demand, Goldman Sachs analysts estimated.
“However, it will remain an oil inventory release, not a continuing source of supply for years to come,” Goldman analyst Damian Corblyn warned in a comment to clients.
In Asian stock markets, Hong Kong’s Hang Seng Index fell 1.1%, while China’s Shanghai and Shenzhen CSI 300 fell 0.7%. Japan’s Topix was down 1.1%.