Today there is lots of excitement in the oil market. The reason for all the noise is an upcoming announcement by United States President Joe Biden regarding opening up the country’s Strategic Petroleum Reserves.
Biden will allow oil from the SPR to become available within the US in order to boost supply and drive prices down from the seven-year maximum they hit recently. The United States, like other regions, is experiencing a spike in inflation and in energy costs due to the current balance between supply and demand, largely determined by OPEC+.
Several US allies that are experiencing the same problems (think: Japan, South Korea) might follow with similar announcements about their own reserves.
As a result, oil prices are already moving lower. The Brent crude today is trading at $79.16, while the WTI dropped to $75.90 per barrel.
Another piece of news related to President Biden is that the POTUS chose to nominate Jerome Powell for a second term as head of the Federal Reserve. The nomination will almost certainly be confirmed soon.
With Powell keeping his post for several more years, things will continue unchanged in the Fed. As a result, investors’ confidence of a rate hike next year has increased, which boosted US Treasury yields and sent the US dollar soaring against other major currencies.
In relation to the above-mentioned developments, all major US stock indices took a hit today and will trade lower, thanks to the higher yields and rate hike prospects.
In the emerging markets, the Turkish lira is once again experiencing a crisis. President Erdogan caused it by once again asking the Turkish central bank to keep interest rates low, despite inflation running as high as 20% of late.
Meanwhile, Europe impressed investors today with all-around better-than-anticipated manufacturing, services, and composite PMIs for November from both Germany and the eurozone as a whole.
It seems that the latest resurgence of the coronavirus pandemic on the continent has not harmed the economy as much as feared, though if more countries enter lockdowns in the coming weeks, things will change for the worse.
In addition, the United Kingdom also impressed investors with its own set of PMI reports. Later today we await the manufacturing PMI from the United States as well.
