Technology stocks were rising premarket Wednesday, with the State Street Technology Select Sector SPDR Fund (XLK) up 1.1% and the State Street SPDR S&P Semiconductor ETF (XSD) advancing by 3.2%.
Micron Technology (MU) shares were up more than 6%, extending gains after the company's market capitalization eclipsed $1 trillion for the first time on Tuesday.
Oil traded lower for a second session early on Wednesday on expectations the United States and Iran will reach a deal to reopen the Strait of Hormuz and end the largest-ever energy supply shock.West Texas Intermediate crude oil for July delivery was last seen down US$3.29 to US$90.60 per barrel, the lowest since April 20, while July Brent oil was down US$2.66 to US$96.92.The drop comes as United States and Iran continue negotiations to end their war and reopen the crucial waterway that is the chokepoint for the 20% of daily oil supply from Persian Gulf nations that has been closed since the Feb. 28 start to the war.Talks between the two countries are continuing in Qatar. While U.S. President Trump has repeatedly said a deal is near, The Guardian reported Iran is unwilling to agree to a deal that does not meet all its conditions. The paper said Iran has also launched talks with Oman on future regulations for ships transiting the Strait, which had been an international waterway prior to Iran's blockade.Though oil prices have retreated from April highs above US$110 per barrel, there is little expectations prices will quickly return to pre-war levels as importers look to rebuild inventories."Even if a deal is reached, market normalization is likely to take months, with ongoing demand for replacement barrels and depleted inventories potentially leading to a higher price floor than the one seen before the war," Saxo Bank noted.
U.S. crude oil inventories are forecast to have declined 1.4 million barrels in the week ended May 22, following a draw of 7.9 MM BBL in the prior week, with the crude balance again realizing tighter than its expectations, Macquarie said in a Tuesday note.Beyond normal variability in flow items, Macquarie once again noted that persistently high crude exports and strategic petroleum releases could inject considerable volatility into weekly figures. Macquarie said it remains focused on refined product inputs and emerging signs of demand destruction following three straight weeks of soft implied distillate demand and two weeks of weak gasoline prints.From refineries, Macquarie expects crude runs to have risen 0.3 million barrels per day. Net imports are expected to have modestly increased, with exports down 0.3 MBD and imports up 0.1 MBD on a nominal basis.Implied domestic supply is forecast to have risen 1.0 MBD following a weak print in the previous week. Strategic petroleum reserves are projected to have dropped 9.1 MM BBL, Macquarie added.Among products, gasoline stocks are forecast to have fallen 2.5 MM BBL. Meanwhile, distillate stocks and jet fuel inventories are projected to have gained 0.3 MM BBL and 1.2 MM BBL, respectively, Macquarie said. Implied demand for these three products are forecast at 14.6 MBD, it added.
Crude oil prices dropped on Wednesday as the market focuses on potential progress made in peace talks between the U.S. and Iran despite renewed hostilities.Brent crude at last look had lost 3.3% to US$96.28/barrel and West Texas Intermediate crude had fallen 4.1% to $90.02/barrel. Both sides had indicated developments in talks to reopen the crucial Strait of Hormuz, but strikes on both sides are threatening negotiations, Reuters said in a Wednesday report.The U.S. military carried out new strikes in Iran, which said on Tuesday that the U.S. had violated a ceasefire near the contested Strait of Hormuz. The U.S. said its strikes were defensive in nature, the report said. Israel also ramped up bombing in Lebanon.However, some liquefied natural gas tankers have reportedly transited through the strait in recent days, sparking expectations that the waterway could reopen soon, Reuters reported.