The market capitalization of the major American indices S&P 500, Dow Jones and NASDAQ 100 over the past week increased by 0.5%, 0.6% and 0.7%, respectively. On Wednesday, following the publication of the Beige Book, major indicators closed the session near record levels. The document says that economic activity in the United States from early April to late May grew at a moderate pace, slightly higher than earlier this year. However, the next day, the market corrected on positive data on initial claims for unemployment, which continue to decline and update the minimum levels before the pandemic. On Friday, an important package of May data on the US labor market was released. The statistics turned out to be worse than expected, which was greeted with optimism by market participants. Weak numbers indicate that the labor market is far from ideal, so the Fed should not tighten monetary policy prematurely.
By the end of the week, Brent showed growth by almost 4.7%, WTI – by 4.9%. OPEC + and the International Energy Agency expect further recovery in oil demand. The IEA, in particular, now expects demand to return to pre-crisis levels in a year, rather than in 2023. If OPEC + does not increase production after July, there is a risk of further growth in the supply deficit in the second half of the year, which will support oil quotes. The report of the US Department of Energy, published the day before, showed a significant decrease in the reserves of “black gold” in the country, but the reserves of gasoline and distillates unexpectedly increased, which was perceived by traders as a signal of weak demand for petroleum products. Meanwhile, investors continue to follow the talks on Iran’s nuclear program.
This week, investors will be closely watching the May data on US inflation, which will be published on Thursday. On the same day, the European Central Bank will hold meetings on monetary policy. The regulator is expected to keep the key rate at the current level. On the same day, the monthly review of the oil market and OPEC forecasts for the next year will be published, and negotiations on a nuclear deal with Iran will resume in Vienna.