Oil struggles to rally as economic activity eases in China
European stocks rebounded on Friday after the hawkish outcome of the ECB meeting and better-than-expected ECB economic staff projections.
European Union energy ministers met on Friday to discuss how to tackle the energy crisis. The key point on the agenda was the price cap on Russian gas and oil.
Rising gas prices may force some European countries heavily dependent on supplies from Russia to introduce rationing as winter approaches, threatening industrial shutdown and recession in the region.
New UK Prime Minister Liz Truss announced plans to cap consumer electricity bills for 2 years and bail out energy companies, which could cost the country around £150bn ($290bn).
Despite the large interest rate hike, the ECB meeting was a risk-on event as the regulator downplayed recession concerns hinting at further tightening in the coming months in order to curb rampant inflation.
Data released on Friday showed that industrial production in France fell by 1.6% m/m in July, a sharper fall than -1.2% in the previous month.
Oil prices rose on Friday, rebounding from a 8-month low, but heading for a second consecutive weekly decline as sharp monetary tightening and COVID-19 lockdowns in China dampened demand.
Data released on Thursday by the US Energy Information Administration showed a significant increase in the oil inventories by 8.8 million barrels last week, more than what the American Petroleum Institute, the industry body, reported on Wednesday, raising doubts about the strength of US energy demand.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.