Oil prices Soar on OPEC+ Talks Fail

Oil

Oil prices extended their upside rally as OPEC+ abandoned talks. Investors are hoping for a tighter market supply as producers clashed over baselines. However, producers could raise their production and even trigger a price war, similar to that we had early in 2020. The organization has set no date to resume talks. The West Texas Intermediate crude August contract rose to $76.95, the highest since 2014, and the Brent Blend September contract rallied to $77.81.

USD

The dollar index, which measures the greenback against a basket of major currencies, rallied to 92.31, trimming Asian-session losses, as the market exits thin trading with the US resuming today. The US June jobs report showed that the US economy created 850 thousand jobs, the unemployment rate ticked higher to 5.9%, while average hourly earnings rose by only 0.3%. In general, the report indicated progress in the labor market recovery, with wages rising less than expected, capping inflation woes. The EURUSD dipped to $1.1845, the GBPUSD slipped to $1.3855, and the USDCAD rose to 1.2352.

Equities

Major US stock index futures hovered in a tight range as investors await the US open. The US economy continued to recover significantly, with the jobs report promoting optimism. However, the recent covid19 Delta variant outbreak is weighing on sentiment. The Dow Jones Industrial Average futures eased to 34645, the S&P500 futures held steady near 4340, and the tech-heavy Nasdaq was almost unchanged near 14700.

Metals

Precious metals prices inched higher as investors feared the clashes between oil producers could trigger a price spike and raise inflation. Market participants are looking for gold as an inflationary hedge with the US yields underperforming. The price of a gold ounce rose to $1809, the price of a silver ounce inched higher to $26.70, and palladium extended its upside rally to $2840.

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