Floods threaten Cushing, up oil prices

Asia

Global equities maintain their month-long fall, the Shenzhen Composite leading with a 1.4% loss this morning, as markets continue to react to fears that China may curb rare earth output. In Australia, building permits continued to contract, 4.7% in April – a third of the level the month before, putting the YoY figure at -24.2%.

Europe

The Euro yesterday lost 30 pips as Germany reported its first unemployment increase in 6 years. In France, producer prices contracted by half a percent, while consumer inflation fell by half to 0.2% MoM. On the other hand, consumer spending there increased by 0.8%. Both consumer and business confidence in Italy is on the rise, adding about 2 points to each. Meanwhile, Reuters this morning reports that Brexit concerns have already resulted in a 44.5% reduction in UK car production, which accounts for about 9% of the nation’s entire manufacturing output.

US

Canada yesterday opted to maintain interest rates at 1.75% with policy makers citing on-target inflation and the economic slowdown as “temporary”. Mortgage applications in the US contracted by 3.3% in May, while the Richmond Fed Manufacturing Index, at 5 in May, failed to meet expectations. The USD continues its weeklong uptrend as today’s GDP reading is still expected to come in at above the 3% mark. Indexes, on the other hand, continued their fall, the DJIA losing 500 points as fears of a recession mount.

Commodities

WTI futures shot up by over $2 a barrel after the API reported a 5.26mB contraction in reserves. Adding to the pressure were floods in the region of the national repository at Cushing Oklahoma, which curbed the flow – floods that have already killed 6 people and displaced some 400 families.

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