Price Performance Indicators

• In a week (6/17 - 6/21) the price of ICDX’s crude oil edged up slightly 0.05%.   

• The highest volatility reached 1.65 percent.  

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Market Review

The price of crude oil contracts traded on ICDX throughout the week ending June 21 was observed to move steadily and closed slightly higher by 0.05%. Some of the sentiments that became the focus of the market include the geopolitical situation in the Middle East, especially regarding the war in the Gaza Strip and the escalation of tensions between Israel and Hezbollah, economic growth in China, and expectations of US interest rate policies.

Israel's Foreign Minister, Israel Katz, on Tuesday (18/6) warned that he would soon take a decision on all-out war with Hezbollah. Katz's comments were responded strongly to by Hezbollah leader Sayyed Hassan Nasrallah, who on Wednesday (19/6) emphasized that there would be no place in Israel that would be safe from missiles and drones, if a wider war broke out.

Still from the Middle East, Israel carried out several air strikes in the central and northern Gaza Strip in succession starting from Wednesday (19/6) to Thursday (20/6). After more than eight months of war in Gaza, Israel has now controlled most of the territory in Rafah, and only the last two areas remain that have not been controlled, namely Rafah on the southern edge of Gaza and the area around Deir al-Balah in the center.

Meanwhile, China's sluggish economic growth has sparked concerns that it will also impact oil demand in the world's second largest oil consuming country. The latest economic data released shows a gloomy retail sales sector, seen from the decline in e-commerce sales for the first time at the online shopping festival (18/6). In addition, China's central bank kept its benchmark Loan Prime Rate (LPR) unchanged at its monthly setting (20/6), in line with market expectations. The one-year LPR was maintained at 3.45%, while the five-year LPR remained unchanged at 3.95%.

From the US, employment sector data showed a positive pace for the first time, as seen by claims for unemployment benefits falling by 5,000 to 238,000 for the week ending June 15, the US Department of Labor said on Thursday (20/6). Strengthening the employment sector has the potential to trigger the Fed to keep interest rates higher for a longer period of time, which would usually weigh on economic growth and cause oil demand to fall.

Market View

Escalation of China - EU Tensions Triggers Potential for a New Trade War

China warned that escalating disputes with the European Union (EU) over imports of electric vehicles could lead to a trade war, said a spokesperson for China's Ministry of Commerce (21/6). The warning was triggered by the EU Commission's plan to implement import duties on imports of electric vehicles made in China of up to 38.1% which will take effect on July 4. The meeting between the two parties on Monday (24/6) failed to achieve a positive breakthrough. This situation has raised concerns that it will trigger a new trade war between China and the EU which will have a negative impact on economic growth, especially China, which is the world's first largest importer of crude oil.

The Fed Hesitates to Lower US Interest Rates

Following positive signs of growth in US employment for the closing week ending June 15, San Francisco Federal Reserve Bank President Mary Daly on Monday signaled the US central bank would not need to lower interest rates before policymakers are confident that inflation is headed to 2%. Delaying interest rate cuts will make borrowing costs higher over a longer period of time, which can hinder economic growth, which will also weaken oil demand.

Weekly Economic Data & Events Calendars

Source: ICDX Research