OPEC, in its latest report, has maintained its forecast for global oil demand growth, projecting an increase of 2.25 million barrels per day (bpd) in 2024 and 1.85 million bpd in 2025. The organisation cites resilient economic growth and strong air travel as key factors supporting fuel use, especially during the northern summer. OPEC raised its global economic growth forecast for 2024 to 2.9% from 2.8%, noting potential upside due to momentum outside developed countries. However, there's a growing divergence among forecasters regarding the strength of oil demand growth, partly due to differing views on the pace of the transition to cleaner fuels.
EQUITY
The S&P 500 and Nasdaq hit new records Wednesday, with the S&P 500 topping 5,600 while the Dow broke its losing streak. The rally was mostly led by tech after Powell's congressional testimony suggested a cut without reaching the 2% goal. Overseas, Japan's market hit a record high, while China's index fell on weak inflation data. Markets are now focused on upcoming inflation data and its potential impact on interest rates.
GOLD
Gold prices are on the rise, approaching $2,375 per ounce, ahead of key US inflation data. The upcoming CPI report is expected to influence interest rate paths, and Fed Chair Powell has come out and demanded more evidence of slowing inflation before making decisions. Markets are pricing with a high probability of rate cuts later this year, which has boosted gold's appeal. Global gold ETFs have also seen increased inflows, particularly in Europe and Asia.
OIL
Oil prices recovered after three losing days, driven by lower U.S. crude and gasoline inventories coupled with OPEC's optimistic forecast for global oil demand growth. The Energy Information Administration projects a slight supply deficit by 2025, further supporting the positive trend. BP Plc predicts global oil demand will peak in 2025, with oil demand declining significantly by 2050 under both the current trajectory and net zero scenarios.
CURRENCY
The Australian dollar, Chinese yuan, and South Korean won all gained ground against the dollar after Fed Chair Powell's dovish comment sent the dollar lower. The Bank of Korea left interest rates unchanged for the 12th consecutive meeting, but some policymakers suggested a potential rate cut within the next three months. Meanwhile, the British pound reached a four-month high after Bank of England policymakers indicated that price pressures remained stubborn, influencing markets to scale back expectations of an August rate cut. The euro also saw a slight increase against the dollar.
