Volatility in oil prices could create more … volatility in oil prices: Speculators have dumped their oil holdings as prices crash, leaving the market in desperate need for liquidity, Bloomberg reports. Investors are looking for the door after a week of declines that at one point pushed WTI crude prices as low as USD 63.64 a barrel, a low not seen since late 2021. Money managers have ditched net-bullish positions by 19%, leaving the market to “algorithm or momentum-based traders” and potentially spurring more volatility.

Contagion in the cards? “We’re not there yet, but if oil drops below USD 63, it will cascade in other markets — even stocks,” one analyst said, adding that “oil lures speculators when prices move higher. They need to see a more rational market.” Bulls will be looking for a slowdown in Russian output or a pickup in Chinese demand before they return, according to the business news outlet.

European gas prices have also dropped: The European gas benchmark fell to EUR 35.20/MWh on Friday — its lowest since July 2021 — following a mild winter and as the continent succeeds in finding alternative sources of gas and bringing online more renewable power, the Financial Times reports. That’s compared to theall-time highof EUR 350/MWh that European gas hit last summer as Russia slashed its exports of natural gas amid the war in Ukraine.

Good news for inflation? The gas price drop has some expecting that the high inflation seen in most major markets over the past year could now start to cool, leading the European Central Bank to raise interest rates by a smaller 25 bps last week after a spate of larger rate hikes aimed at curbing price growth.

Also worth noting this morning:

  • Mohamed Mansour’s Mantrac exits Russia: Egyptian business icon Mohamed Mansour’s Caterpillar equipment firm Mantrac has suspended Russian operations after Britishmedia reported it was supplying machinery to the country’s oil and gas industry. (Bloomberg)
  • Saudi growth slips in 1Q 2023: Saudi Arabia’s GDP increased by 3.9% y-o-y in 1Q 2023, down from 5.5% in 4Q 2022 (pdf), mostly due to a slowdown in the oil economy. (General Authority for Statistics — pdf)
  • US unemployment at 54-year low: The US unemployment rate dropped to 3.4% in April — its lowest level since 1969 — on the back of a sweeping hiring boom that saw some 253k jobs created. (Wall Street Journal)

EGX30

17,235

-0.4% (YTD: +18.1%)

USD (CBE)

Buy 30.84

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

11,257

+1.2% (YTD: +7.4%)

ADX

9,706

+0.3% (YTD: -5%)

DFM

3,583

-0.2% (YTD: +7.4%)

S&P 500

4,136

+1.9% (YTD: +7.7%)

FTSE 100

7,778

+1.0% (YTD: +4.4%)

Euro Stoxx 50

4,340

+1.3% (YTD: +14.4%)

Brent crude

USD 75.30

+3.9%

Natural gas (Nymex)

USD 2.14

+1.7%

Gold

USD 2,024.80

-1.5%

BTC

USD 28,928

+0.2% (YTD: +75.3%)

THE CLOSING BELL-

The EGX30 fell 0.4% at yesterday’s close on turnover of EGP 1.25 bn (29% below the trailing 90-day average). Foreign investors were net buyers. The index is up 18.1% YTD.

In the green: Ibnsina Pharma (+4.6%), Ezz Steel (+4.1%) and Mopco (+2.1%).

In the red: AMOC (-2.4%), ADIB (-2.3%) and Eastern Company (-1.8%).

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