Oil prices hit a high amid rising Iraq conflict

Escalating conflict in Iraq has pushed up oil prices to new highs, amid concerns that supplies from the second-largest Organization of the Petroleum Exporting Countries (OPEC) producer could be disrupted.

An oil pumpjack
Source: Bloomberg

Last night, Sunni militants extended their advance south towards Baghdad and surrounded Iraq’s largest refinery. Since the news broke, WTI gained more than $1.60 to hit over $107.65 per barrel in morning trade – the highest level since last September. This also pushed Brent futures up by $3.07 closing at a nine-month high of $113.02 a barrel.

There was some relief for precious metals platinum and palladium, with a deal outlined to end South Africa’s longest mining strike between workers and three producers.

Following their recent run up, palladium fell over 4.5% to as low as $819 per ounce this morning, while platinum dropped over 2.45% from yesterday’s high to as low as $1443.41 per ounce.

Poor data to weigh down markets

Investor sentiment will likely be weighed down with the latest US economic data, with retail sales missing expectations and jobless claims rising in May. Retail sales rose 0.3% in May, half the markets consensus forecast, while jobless claims rose by 4,000 to 317,000 –  more than the markets’ expectation of 310,000.

This saw the major US bourses close lower: the Dow Jones industrial average -0.65% at 16,734.19; S&P 500 -0.71%, to 1,930.11; and NASDAQ down 0.79% to 4,297.63.

Ahead of the Singapore Open

Asian markets could get some leads from China today, with its May’s retail sales and industrial production data helping to shed more light on the strength of its economy.

So far, recent indicators such as the PMI and export numbers have suggested a recovery taking shape. On the back of the recent injections and credit easing by the People’s Bank of China (PBoC), we could see an uptick in industrial production. This could give some relief to the slump in iron ore and copper prices.

We’re calling for MSCI Singapore to open -0.80 points at 372.45.

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