The discovery and development of shale oil fields in the United States has transformed the global outlook for oil supplies. The U.S. oil shale industry has been resilient and flexible, quickly adjusting production in response to changes in prices, which may lead to a “new and tighter” range for oil prices.
German government bonds extended a sell-off that pushed 10-year yields up last week by 36 basis points (bps) to the highest since November amid signs of the country’s improving growth outlook. The yield on German 10-year bunds gained 3 bps to 0.87 percent after hitting as high as 0.9 percent earlier trading. The rise in German 10-year yields since mid-April, from near zero to just below 1 percent last week, has been a central driver of the European bond markets.
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Oil prices rose on Friday after U.S. crude inventories dropped for a fourth consecutive week. Wildfires in Canada, which knocked out 10 percent of its oil sands output, also supported prices. Oil saw sharp falls earlier this week amid a strengthening dollar. Brent crude, the global benchmark, was up $1.87 cents (or nearly 3 percent) to $64.45 a barrel, while U.S. crude, also known as West Texas Intermediate (WTI), rose $1.60 (or 2.8 percent) to $59.28.
European financial markets rallied on Wednesday after reports that Greece and its creditors, including the International Monetary Fund, is nearing a deal that will proved debt relief to the struggling nation. Europe’s benchmark stock index closed 1.3 percent up with Greek shares gaining 3.6 percent. The euro strengthened 0.2 percent against the dollar to $1.09, up from its session low of $1.0815 earlier. The yield on the benchmark 10-year Greek government bond fell about 64 basis points to 11.3 percent.
Hungary's central bank cut its key interest rates by another 15 basis points as expected by economists. The Magyar Nemzeti Bank on Tuesday reduced the base rate to a record low 1.65 percent from 1.8 percent. This was the third consecutive monthly reduction in rates. The bank had lowered the rate by 15 basis points each in March and April.
High Income Economies