Selling pressure dominates oil prices

Uncertainty drives oil prices down

By Raed Alkhedr | @raedalkhedr | 5 July 2023

  • Uncertainty dominates US stocks

  • Oil falls below $78 per barrel

  • The likelihood of a US interest rate hike in May has reached 90%

Gold prices fall due to rise in US dollar

Gold prices fell during Tuesday's trading session as the US dollar strengthened. The markets are closely monitoring economic data in the US, as it will determine the future direction of the Federal Reserve. Spot gold initially dropped by 0.5% to $1978.72 an ounce, but it later bounced back to $1990 an ounce. Similarly, US gold futures dropped by 0.5% to $1989.00. In contrast, the dollar index increased by 0.3%.

According to FedWatch, the market anticipates a 90% chance that the Federal Reserve will raise interest rates by 25 basis points at its May meeting, and the possibility of a rate hike is expected to increase in the second half of 2023.

Oil prices drop amid selling pressure and economic uncertainty

Selling pressure continued to dominate oil trading on Tuesday as global economic uncertainties and a rising dollar dampened investor optimism about demand in China and expectations of a decline in US crude inventories. Brent crude dropped by 0.9% to $82.03 a barrel, while West Texas Intermediate crude fell to $78.11, after both contracts rose by more than 1% on Monday.

Investors remain concerned about the possibility of central banks in the US, UK, and EU raising interest rates further to curb inflation, which could slow down economic growth and weaken energy demand. The dollar's rise amid concerns about corporate profits and the global economy has also contributed to the fall in oil prices.

As the market awaits more information on the global economy and central bank policies, selling pressure is expected to continue to dominate oil trading.

US stock futures decline as caution dominates markets

Caution dominates US stocks as traders assess the latest quarterly numbers from many major companies. On Tuesday, futures for the Dow Jones Industrial Average fell 0.2%, while both the Nasdaq and S&P 500 indexes dropped by 0.3%.

First Republic Bank shares took a significant hit, falling by more than 20% after the regional bank released its latest quarterly results. The bank announced on Monday that deposits had fallen by 40% to $104.5 billion in the first quarter, but they have since stabilized.