Price Performance Indicators

• In a week (7/15 - 7/19) the price of ICDX’s crude oil edged down almost 4%.   
• The highest volatility reached 2.96 percent.    

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Market Review

The price of crude oil contracts traded on the ICDX throughout the third week of July closed lower, falling below the level of $ 80 per barrel burdened by sentiment from the escalation of tensions between China and the EU that continues. In addition, other market focus is also on the uncertainty of the direction of the US interest rate decision, the stimulus steps of the Chinese central bank, and geopolitical developments in the Middle East.

The signal of the ongoing heating of relations between China and the EU has sparked concerns that it will lead to a new trade war. The beginning of the tension was triggered by the EU's decision to apply anti-subsidy tariffs of up to 37.6% on imports of Chinese-made electric vehicles, which took effect on July 5 and were temporarily imposed for 4 months. In retaliation, the Chinese Ministry of Commerce on Thursday (7/18) announced the start of a preliminary investigation into anti-dumping of EU pork imports and French liquor, Cognac.

Weighing on further price movements, expectations for a U.S. interest rate cut that had strengthened earlier in the week faded again after San Francisco Federal Reserve Bank President Mary Daly said on Thursday (7/18) that price stability is not yet achieved, so more confidence is needed that inflation has returned to the Fed's 2% target before calling for a rate cut. The Fed is scheduled to meet in late July.

Meanwhile, China's central bank earlier in the week decided to keep its medium-term interest rate unchanged at 2.50%, while rolling over 3 billion yuan of maturing medium-term loans. The central bank's cautious decision, which indicated limited government stimulus measures, following the release of second-quarter GDP data earlier, added to market pessimism about economic growth in the world's largest oil importer.

In the Middle East, Israel's escalating attacks on Lebanon's Hezbollah group have raised concerns about the potential for a new conflict zone to flare up, in addition to the ongoing Gaza war. In one of several strikes on the southern Lebanese border villages of Safad El Battikh and Jmaijmeh, Israel killed two field commanders of the elite Radwan force, the Israeli military and two security sources said on Thursday (7/18).

Market View

China's Central Bank Cuts Interest Rates for First Time Since August 2023

China's central bank on Monday (7/22) announced its first interest rate cut since August 2023 by lowering the short-term lending rate to 3.35% from 3.45% previously, and the long-term rate was lowered to 3.85% from 3.95%. China's bank lending rates usually refer to this lending rate, so the decision to cut by the central bank signals the Chinese government's seriousness in encouraging economic recovery in order to achieve the expected growth target.

Israel Optimistic Ceasefire Agreement Can Be Reached Soon

Israel Prime Minister Benjamin Netanyahu on Monday (7/22) was optimistic that an agreement sought to free the families of hostages held in Gaza, will be reached soon because all conditions have been met. Discussions on the ceasefire agreement are scheduled to continue on Thursday (7/24) between US President Joe Biden and Israel Prime Minister Benjamin Netanyahu. Meanwhile, for negotiations on the release of hostages, Israeli negotiators will be in Cairo on the same day.

Weekly Economic Data & Events Calendars

Source: ICDX Research