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Oil At A Three-Year High Due To Weak Dollar

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The oil prices reached a three-year high, and the Brent breached the $70 mark and was at $71.4 for a barrel and the US WTI made gains for six consecutive weeks due to a weak dollar and the Chinese economic data showing signs of recovery and stabilization. But the stocks did not do too well after it was down most of the week.

In the global market

The Chinese blue-chip stocks recovered and remained stable after the Chinese data was reported. The Australian stocks which mirror the Chinese market were up by 0.8% due to high iron ore prices. Nikkei was also up today. In the commodities market, the gold prices were a little higher after observing a fall and being below $1, 300 mark. The gold ended the day trading at $1, 293.24 for an ounce.

Germany’s long-term government bond yields were positive but subdued as there were reports in a leading magazine of the reduction in growth forecast by almost a half. Currently, leading economists are predicting a 0.8% growth for the German economy and the latest report in the magazine added to fears of already slow growth in the EU. Despite all the concerns of the growth cut in Germany and the IMF again reducing the forecasts the euro gained due to the closure of the multi-billion euro deal of DZ Bank.

The surprise of the day was the Sterling ending higher even as IMF director said that the delay over the Brexit deal avoided a ‘terrible outcome’ but maintained that there was still uncertainty over the end-result.

In the emerging markets, the China data helped overcome the reports of rate cuts in Germany and also weak imports in Europe.

A senior strategist said,

“The Chinese data was a little mixed, but the money supply numbers were a positive impulse overall.”

Oil prices to go higher

The rise in oil prices is going to go higher as per strategists due to the sanctions imposed by the US on Iran, Libya, and Venezuela along with OPEC reducing production. A BNP Paribas strategist said ‘We expect oil price to eventually move higher in Q2 as OPEC and its allies potentially run the risk of over-tightening the market by maintaining its current course of action’.

Chinese economy still remains to be the key risk which could threaten the already reeling world economy which could result in a bigger than expected slowdown.

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