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Brent oil

Morgan Stanley raises its Q3 2022 Brent oil estimate to $120 from $100 previously.

Morgan Stanley makes a couple of quick adjustments to the oil market outlook.

Lowers Russia’s production forecast by 1 million barrels per day.

The global demand forecast has also been reduced, but only by 0.6 million bpd.

Barring any major disruptions in demand, tighter inventories should continue to support prices in general in the months ahead. 

Russia

Russia says talks with Ukraine are continuing. Both sides are discussing military, political, and humanitarian issues.

It is difficult to read much into the Russian foreign ministry’s remarks above because these types of talks have been going on for the past two weeks. When we hear that there may be some progress to be made, they never mean it, so believe what you will. As the situation on the ground continues to unfold, this appears to be more political theatre to me.

Russia claims to be putting more effort into peace talks than Ukraine. According to Kremlin statements, their conditions for a peace treaty are crystal clear. They are aware that the Ukrainians have a penchant for dragging things out. An agreement with clear parameters could quickly put a stop to what is happening.

It doesn’t really matter who is doing what or saying what in negotiations right now. The truth is that neither side can agree on what is required for an agreement, and that is unlikely to change anytime soon. When asked about progress toward an agreement, Moscow claims that it is not entirely correct. Adding that there are elements of recent reports that are true, but not the entire picture. In a nutshell, that’s a ‘no.’

Europe

Today the European equities had Slightly positive tones at the opening

Eurostoxx +0.6 percent, Germany DAX +0.4 percent, France CAC 40 +0.6 percent, UK FTSE +0.5 percent & Spain IBEX +0.4 percent

As the week progresses, European stocks continue to outperform. Investors appear to be feeling better about the Russia-Ukraine situation, as talks continue and the situation on the ground has not deteriorated. US futures are also remaining calm, with the S&P 500 futures little changed and the Nasdaq futures currently up 0.1 percent.

Stocks

• European indices turn negative on the day
• Post-Fed volatility continues to play out as equities begin to push lower on the day The S&P 500 futures are down 0.5 percent, and European indices are also down for the day. The DAX is currently down 0.9 percent after a more optimistic start earlier. The dollar is also gaining ground against the euro, with EUR/USD falling from 1.1060 to 1.1035, near flat on the day.
• Bond yields are also falling, with 10-year Treasury yields now down 7 basis points to 2.11 percent.
• It is still higher on the week, but given the post-Fed move, it is creating an interesting market situation before the weekend. The drop in yields has caused the USD/JPY to fall from 118.70 to 118.50 during the session.