MARKET UPDATE

Oil extends gains as risk appetite improves, U.S. inventories fall

Oil rose more than $1 a barrel on Thursday, extending gains from the previous session, buoyed by improved risk appetite among investors as lower crude inventories and a rebound in gasoline demand in the United States supported prices.

Brent crude futures for September rose $1.13, or 1.1%, to $107.75 a barrel by 0619 GMT, after gaining $2.22 on Wednesday.

U.S. West Texas Intermediate crude (WTI) was at $98.53 a barrel, up $1.27, or 1.3%, after rising $2.28 in the previous session.

“Risk sentiment has recovered from recession fears due to the ongoing U.S. earnings optimism and less aggressive Fed rhetoric on rate hikes, which supported a rally in the crude market,” CMC Markets analyst Tina Teng said, adding that a weakened U.S. dollar has also lifted commodities prices.

 

Shell smashes record again with $11.5 billion profit

Shell on Thursday reported a second quarter profit of $11.5 billion, smashing its previous record just three months earlier, lifted by a tripling of refining profits and strong gas trading.

The company also announced a share buyback programme of $6 billion for the current quarter, but did not raise its dividend of 25 cents per share. It said shareholder returns would remain “in excess of 30% of cash flow from operating activities”.

A rapid recovery in demand following the end of pandemic lockdowns and a surge in energy prices, driven by Russia’s invasion of Ukraine, have boosted profits for energy companies after a two-year slump.

The strong oil price backdrop has helped Shell deliver a blockbuster set of results. The dividend may have remained the same, but the share buyback programme is positive news for shareholders,” said Stuart Lamont, investment manager at Brewin Dolphin

 

BOJ must always brainstorm ideas on ending low rates, says deputy gov

The Bank of Japan must always think about the appropriate means for exiting ultra-loose monetary policy, even if an actual lift-off will be some time away, deputy governor Masayoshi Amamiya said on Thursday.

With the economy yet to recover to pre-pandemic levels and inflation still driven mostly by rising fuel costs, the BOJ must maintain its massive stimulus for the time being, he said.

But Amamiya, who is considered among the top candidates to become next BOJ governor, said the central bank was always brainstorming tools and communication methods it could use when an end to ultra-loose policy came into sight.

“How to use our various tools, and in what order, will depend on the strength of inflation and the economy at the time. It’s therefore impossible and inappropriate to lay out details of an exit in advance,” Amamiya told a news conference.

 

 

 

 

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