Commodities retreated in European session as Eurozone's confidence data came in weaker than expected, signaling the pessimistic outlook of the bloc. Moreover, investors believed that EU summit will again be a non-event. The front-month contract for WTI crude oil retreated after rising over the past 2 days while the equivalent Brent crude contract also eased as the impact of the Norwegian strike has already been priced in.
The Eurozone consumer confidence slipped -19.8 in June from -19.6 a month ago. The market had anticipated it to stay unchanged. Industrial confidence and services confidence also dropped to -12.7 and -7.4 from -11.4 and -5.2 respectively. Economic confidence came in better than expected but was still down -0.6 points to 89.9 during the month. The market has not much expectation over the EU summit. Germany's Chancellor Merkel reiterated her rejection of joint issuance of Euro bonds as she described it as wrong and counterproductive.
The strike in Norway has removed 240K bpd of North Sea output. While the incident has sent Brent crude prices higher earlier in the week, the impact has already priced in. Regarding the sanctions over Iran, the Deputy Oil Minister said the country's crude oil exports are expected to fall gradually by 20-30% in coming months.
On the dataflow, US economic indicators were encouraging. Durable goods orders rose +1.1% in May, better than consensus of +0.5 and April's +0.2%. Excluding transportation, durable goods orders also climbed +0.4%, following a -0.6% drop in the prior month. Pending home sales soared +5.95 m/m in May, compared with expectations of +1.3% and a -5.5% decline in April. Final US GDP growth probably stayed unchanged at annualized +1.9% in 1Q12. Initial jobless claims might have dipped -1K to 385K in the week ended July 23.