The American Petroleum Institute reported on Tuesday that U.S. crude inventories rose by over 1.1 million to 429.1 million barrels in the week ending on April 20. Affected by the continual rise in U.S. crude inventories, which undermines the efforts led by OPEC to lower global supply, prices of oil went lower from their recent highs. Brent crude futures, the international benchmark for oil prices, declined by 8 cents and settled at $73.78 a barrel – $1.7 lower from their 2014 high of $75.47 capped on Tuesday. WTI crude lost 4 cents and was traded at $67.66 per barrel. On a positive note, it still remains close enough to 2014 high of $69.56 per barrel capped earlier this month.
Despite of the bearishness in Wall Street, the dollar was able to maintain its strength. The stability of the dollar was the result of the recent surge in the U.S. 10-year bond which capped 3% on Monday for the first time since 2014. The dollar index settled at 90.824 .DXY. Versus its Japanese counterpart, the greenback was traded at 108.935 yen. The British pound, on the other hand, climbed 0.05% against the dollar and settled at $1.3989 – an inch away from the its one-month low of $1.3919 recorded the previous day.
The rise of the 10-year Treasury yield triggered a slide in Wall Street and as mentioned above, benefited the dollar. Yukio Ishizuki, senior currency strategist at Daiwa Securities in Tokyo, mentioned that the situation was similar to what had happened in February, when U.S. yields advances triggered equities to decline. However, according to Ishizuki, the current situation is a bit different from February as the effect on U.S. stocks is more moderate. We should bear in mind, Ishizuki concluded, that the market re-shifted its focus on interest rate which is expected to support the dollar.