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Ofgem to unveil new household energy bill price cap on Thursday morning – business live |

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Oil prices have climbed towards the seven-year highs reached last week, after a drawdown on US crude stocks suggested strong demand and amid a lack of supply, but investors remained cautious ahead of a meeting by the Opec oil cartel and its allies (known as Opec+) later today.

US crude stocks fell by 1.6m barrels in the week to 28 January, more than expected, Reuters reported, citing market sources who had seen American Petroleum Institute figures.

Brent crude is up 20 cents at $89.36 a barrel while US light crude has gained 21 cents to $88.41 a barrel. The Organisation of the Petroleum Exporting Countries and its allies including Russia are expected to stick to the group’s policy of moderate boosts to output at today’s meeting, i.e. pumping 40,000 more barrels a day from March.

Tight global supplies and geopolitical tensions in Eastern Europe and the Middle East, in particular the standoff between Russia and Ukraine, have driven up oil prices by about 15% so far this year. Last Friday, crude benchmarks hit their highest prices since October 2014, with Brent touching $91.70 and US crude hitting $88.84 a barrel.

Tensions are rising between Russia, the world’s second-biggest oil producer, and the West over Ukraine, stoking fears that energy supplies to Europe could be disrupted. Vladimir Putin has accused the US of ignoring Russia’s security proposals in his first public comments on the growing crisis over Ukraine since December last night.

Markets will also be closely watching inflation data for the eurozone for January. Economists are forecasting a drop to to 4.4% from 5% in the annual rate, due to events a year ago which saw a big jump in the January 2021 inflation numbers (the reintroduction of regular VAT rates and additional climate measures which boosted German inflation).

Michael Hewson, chief market analyst at CMC Markets UK, says:

While it will be convenient for the European Central Bank to paint this as evidence of their argument that inflationary pressure is transitory and now falling, we already know from the experience of the US it is nothing of the sort.

There is also the added complication that factory gate price in inflation is even higher, and well above 20% in Germany, Italy and Spain. With markets already pricing in the prospect of two ECB rate rises this year, tomorrow’s ECB press conference will be an exercise in trying to spin a narrative that the market simply doesn’t buy.

Just before the US open, we get to see the latest ADP payrolls report, which in December saw the US economy add 807,000 jobs, which was a bit of an outlier to the equivalent non-farm payrolls report a couple of days later. Today’s January report could well come in much weaker due to the disruption caused by Omicron over the Christmas and New Year period, which has seen weekly jobless claims rise sharply.

The Agenda

  • 10am GMT: Eurozone inflation for January (forecast: 4.4%)
  • 10am GMT: Italy inflation for January (forecast: 3.8%)
  • 1.15pm GMT: US ADP jobs report for January (forecast: 207,000)

Read More: Ofgem to unveil new household energy bill price cap on Thursday morning – business live |

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