Prices of petrolium in sharp decline, natural gas in the spotlight after the breakdown in Norway and European stock exchanges in deep red ballast already projected on the ECB meeting on 6 June. These are the three loose cannons that weigh on a Tuesday devoid of macro data, but full of uncertainty on the markets.
Oil prices continue to fall
THE oil prices continue to lose ground after the sharp slowdown on Monday which led to the Brent to fall below the psychological threshold of 80 dollars a barrel, the lowest since February, and the US WTI to drop below 75 dollars. Today, European crude oil loses a further 1.2% to 77.41 dollars per barrel, while Texan crude oil loses 1.48% to 73.12 dollars per barrel. The strong doubts created by theOpec which decided on Sunday to extend current production cuts until the end of 2025 by 3.66 million barrels per day, compared to the initially planned deadline of the end of 2024. An extension of voluntary cuts by 2.2 million was also agreed barrels per day that were due to expire at the end of this month, but will now be kept in place until the end of September, before being phased out by September 2025. The United Arab Emirates was finally granted the option to further increase the cap on production, while for all other member countries the revision of quotas has been postponed to 2026.
The news announced by the Organization of Petroleum Exporting Countries has disoriented analysts and investors who do not know how to interpret the effects of a strategy announced in a complex and opaque way. “Oil prices faced a double whammy, with supply weighed down by OPEC+ guidance and demand conditions not well supported by weaker-than-expected US manufacturing activity,” explains Ing.
The increase in supply by OPEC+ could flow into a market where demand has already shown signs of weakness with investors due to the increase in supply over the course of the year after signs of a weaker demand in the United States, he claims Reuters. US manufacturing activity slowed for a second straight month in May, while construction spending in April fell unexpectedly for a second month due to a decline in nonresidential activity, both of which could translate into a weakening of demand for oil and fuel.
Gas prices falling, but the road remains uphill
THE gas prices in Amsterdam they fell below 35 euros per MWh (-2.5%) after having risen by more than 13% to 38.70 euros per MWh, the highest level of the year, during Monday’s session. However, tension remains high after failure registered in Norway which jeopardizes the flows coming from Oslo, which has now become the main European supplier. It could in fact take a long time to repair the leak that has opened in the pipeline connecting the Sleipner Riser platform in the North Sea, operated by Equinor, to the onshore plant at Nyhamna, where the gas is treated before export to Great Britain. Gassco said it was collaborating with Equinor to divert at least part of the flows in order to “deliver the maximum possible volumes to Europe”, but in the meantime the old continent also has to face the weekly closure for maintenance of the TurkStream gas pipeline, which transports the Russian gas. In this context, however, EU stocks are still more than 70% full, a level that is reassuring for the near future.
European stock markets in deep red waiting for the ECB
While raw materials fluctuate wildly, European stock markets widen their declines, ballasted precisely by energy stocks, while investors await the first rate cut by the ECBscheduled for Thursday 6 June, already wondering what will happen after the first cut.
In this context it Stoxx 600 lost 0.79%, interrupting a three-day positive streak, with the energy sector recording a decline of more than 2% and reaching a 2-month low. To aggravate the sector’s losses, the British oil giant BP is in sharp decline (-3.79%) after the rating agency S&P Global revised the company’s credit outlook downwards.
Speaking of price lists, the black shirt goes to Madrid, which was down 1.42% at mid-day. Heavy too Business Square which lost 1.3% to 34,219 basis points. Frankfurt is in the red by 1.1% while Paris And Amsterdam they lose 0.79% and 0.62% respectively. Outside the EU London marks -0.59%.
Returning to the individual stocks, the decline in Allianz (-3.62%) after Citigroup downgraded the German group to “neutral” from “buy”. Sales also up Deutsche Telekom (-1.77%). The company said it would increase buyback volume after German state lender KfW announced it would sell a 2.7 billion euro stake.
Piazza Affari in red ballasted by banks and oil companies, eyes on Stellantis
In Piazza Affari the best title is Brunello Cucinelli (+2.3%) followed closely by Stmicroelectronics (+2.14%) which signed an agreement with Geely Auto Group, a Chinese car manufacturer for the long-term supply of silicon carbide (SiC).
Shopping on utilities with Terna (+1.8%), Snam (+0.9%) e Italgas (+0.56%). Positive Amplifon (+1.28%).
At the bottom of the list are banks and oil companies. The worst title is Unicredit (-4.39%) which announced that it will exercise the early redemption option of Fixed to Floating Rate Callable Senior Notes due June 2025, issued on 25 June 2019. The full early redemption of the securities will take place on 25 June 2024. Bad too Bper (-3.85%), Mps (-3.65%), Bpm bench (-2.52%), Intesa Sanpaolo (-2.33%), Mediobanca (-2%), Pop Sondrio (-1.6%).
Oil companies are in deep red: Saipem (-4%), Eni (-2.57%). Eyes up too Stellantis (-1.37%), after the drop in registrations in May announced the day before (-13.9% per year).
Out of the main basket, it runs Newlat Food (+2.74%) on the day of the presentation of the industrial plan of New Princes Group, born from the acquisition of Princes Limited. On shields Ariston Holding (+4.6%) after Citigroup raised its recommendation on the stock to “Buy” from “Neutral”.
Spread rising, euro stable
The spread between BTP and Bund moves slightly higher to 132 basis points from 131 the day before, with the yield of the benchmark ten-year BTP falling to 3.87% from 3.89% the day before. On the currency l‘EUR trades at 1.086 dollars from 1.088 at Monday’s close.
