Sujata Rao gives a look at what’s ahead for markets.

What does it matter if oil prices go up by 50%? As much as 39 million Americans are expected to drive at least 50 miles over the Memorial Day weekend, which is 8.3% more than a year ago, according to the American Automobile Association.

The U.S. energy information agency (EIA) estimates that fuel consumption this summer, between Memorial Day and Labour Day each September, will increase by 75,000 barrels a day compared to 2021. It adds that prices will rise in inflation-adjusted dollars to the extent they have been since 2014.

Oil markets, where oil futures have reached two-month highs exceeding $117 per barrel, are unlikely to be able to take any respite.

China should see an increase in energy consumption, as Shanghai is set to reopen after being locked down.

This is because supply shortages could get worse. Russia predicts a drop in crude production of as high as 8%, as Europe negotiates an oil ban.

The OPEC+ producers group continues to rebuff requests for more crude and will continue to plan for monthly output growth of 432,000 bps.

Will consumers cut down on their other purchases as they spend more oil? Analysts think so. Analysts believe so. Retailers Macy’s, Dollar General (NYSE :), and Dollar Tree (NASDAQ 🙂 reported positive results and guidance. However this also suggests that shoppers may be choosing cheaper alternatives to offset their other expenses.

However, Wall Street saw strong gains due to the positive results of Wednesday’s Federal Reserve Meeting minutes, perceived less hawkishly than anticipated.

U.S. stocks are poised to end their longest losing week in decades. The tech-rich Nasdaq is the most affected by a decline in Fed rate rise expectations and this month’s 20-basis-point retreat of 10-year Treasury yields.

Markets have remained cautious despite gains in Asia. Both European and U.S. equity markets are expected to open lower after the Asia-Pacific gain. Perhaps few people want to hold large long positions during the lengthy weekend in America.

Graphic: Memorial Day – https://fingfx.thomsonreuters.com/gfx/mkt/xmpjoxennvr/Pasted%20image%201653600900035.png

The following are key developments which should give more direction to the markets Friday

China’s Industrial Profits Drop in April

The U.S. labor market is hot but the declining profit margins cast shadow

University of Michigan May consumer survey

– ECB chief economist Philip Lane speaks