At the beginning of the Asian market on September 27 (Tuesday), U.S. oil trading was around $76.70 per barrel; oil prices fell nearly 4% on Monday, closing at the lowest level in nine months, affected by the strengthening of the US dollar. Market participants are waiting for details of new sanctions on Russia, and the extreme intensification of global recession risks has also suppressed oil prices.
focuses on the revised monthly rate of construction licenses in the United States in August, the initial monthly rate of durable goods orders in August, Federal Reserve Evans delivered a speech, and the speech of Federal Reserve Brad; API data was released at 4:30 on Wednesday.
Factors affecting oil prices
[The US dollar continues to rise and suppresses oil prices]
The US dollar hit a 20-year high again on Monday to 114.68. Benefiting from the help of the pound's sharp drop of more than 500 pounds and the euro hit a new low in 20 years, investors are worried that the UK's new economic plan will damage the country's fiscal situation.
US Cleveland Fed Chairman Mester said on Monday that in the face of "unacceptably high" inflation, the Fed should raise interest rates and maintain policy restrictions for a period of time, and if you make mistakes, it is better to do too much than do too little. "When there is uncertainty, it may be better for decision makers to take more radical actions, because radical, preemptive actions can prevent the worst from happening."
Mester said that it would be "very cautious" in assessing inflation and it would need to see several consecutive drops in monthly readings to be sure that inflation has hit its peak. Likewise, it will "prevent complacency with long-term inflation expectations", which have recently declined, but may not be anchored as hoped, and may climb again. She said that in the face of uncertainty in inflation expectations, policy makers should rather set policies too tightly than loosen.
Mester said, "Our policy interest rates will need to be further raised. In order to keep inflation on track to 2%, monetary policy will need to take a restrictive position, and the real interest rate will enter a positive value and stay at this level for some time."
[Worry about the US economy falling into a deep recession US stocks Bear market is getting deeper and deeper]
US stocks fell on Monday, with the S&P 500 index and the Dow closed lower as investors worried that the Fed's radical anti-inflation actions may put the US economy in a deep recession.
After a two-week continuous decline, the Dow confirmed it has been in a bear market since early January. The S&P 500 was confirmed to be in a bear market in June, closing below its mid-June closing low on Monday, expanding its overall decline this year.
The Fed hinted last Wednesday that interest rates may continue to be high in 2023, with the S&P 500 already giving up all gains recorded in the summer rally. Jake, CEO of LongbowAsset Management? "Investors have surrendered because of uncertainty in the federal funds terminal interest rates, is it 4.6%, or 5%,? Is it sometime in 2023?" Severe fluctuations in the global forex market have also shaken the confidence of stock traders, with the pound hitting a record low against the dollar, as people worry that the fiscal plan released by the new UK government last Friday could put the country's finances tight.
This fuels market volatility. With inflation at decades highs, investors are worried that the global economy will fall into recession. CBOE Volatility Index hovers around the three-month high.
According to a widely used definition, the closing level of an index is 20% or more below the record highest closing level, which confirms that the index is in a bear market. The Dow is currently down 20.5% from its record high hit on January 4, so it is confirmed to have been in a bear market since January.
S&P 500 has not yet fallen below its intraday low on June 17. Since 2022, the index has fallen by about 23%; the U.S. stock exchanges have sold a total of 11.9 billion shares, and the average daily trading volume in the past 20 trading days has been 11.2 billion shares.
[The probability of a global recession is as high as 98%]
The leading investment research institution in the United States, NDR (NedDavisResearch), currently believes that the possibility of a global recession is 98%, triggering a "severe" recession signal. The only other data in this model that is so high is during the previous severe economic recession, such as 2020 and 2008-2009, the selling pressure on global stock markets is still increasing. Stephanie Lang, chief investment officer at Homrich Berg, said: "The catastrophic performance of the pound has weakened global risk appetite and exacerbated concerns about the imminent collapse of financial markets. But this bear market is not over yet. If investors continue to underestimate the impact of the rapid rise in interest rates, they will see more negative news."
Positive factors affecting oil prices
[ EU plan to postpone the upper limit for Russian oil prices]
According to foreign media on Monday, the EU plans to postpone the upper limit for Russian oil prices due to differences among member states. Sources familiar with ongoing consultations said countries such as Cyprus and Hungary have expressed opposition to the proposal to set a cap on oil prices.
The above-mentioned person familiar with the matter said that the EU Executive Committee met with member states over the weekend to try to reach a compromise on a package of restrictive measures. EU member states may push for a preliminary agreement ahead of the informal meeting of EU leaders in , held on Prague on 6 October.
Iraq Oil Minister Ihsan Abdul Jabbar said on Monday that OPEC+ is monitoring oil prices and hopes that the market will reach a balance. He said in an interview with state television: "We do not want oil prices to rise sharply or collapse." AbdulJabbar said: "We have entered a challenging period. Global factors have caused the decline of (oil prices), and the most important thing is the slowdown in growth and rising inflation."
[ natural gas leak was found near the operating area of the Nord Stream-2 pipeline]
Local time on September 26, local time, Danish Radio and Television reported that the Danish Maritime Administration observed a natural gas leak in the southeast of Bornholm, Denmark, the Baltic Sea, and had detected a leak at the location where the Nord Stream-2 natural gas pipeline was operated.
reported that the pressure of the natural gas pipeline from Russia through the Baltic Sea to Germany suddenly dropped. Shortly after, the Danish Maritime Authority announced that gas leaks were observed at a location in the Baltic Sea where the Nord Stream-2 pipeline operated.
[Russia's view on the possibility of using nuclear weapons has not changed]
According to the latest news from the Russian Satellite News Agency on the 26th, Russian Deputy Foreign Minister Sergei? Riyabkov said Russia's view on the possible use of nuclear weapons has not changed. “As we have repeatedly pointed out in our public and in our contacts with the U.S. representative, Russia’s view on the topic (referring to the use of nuclear weapons) has not changed at all, and everything remains within the original orbit and framework, established by our military doctrine and the foundation of the Russian Federation’s Basic Policy on the Nuclear Deterrence State.” He added: “We have repeatedly warned our American colleagues that together they and their allies have increased their uncontrollably and uninterruptedly. The various forms of support from Kiev are bringing us all closer to dangerous boundaries. ”
[American Democrats are planning a new bill to establish new oil reserves]
U.S. Congress Democrats are proposing a new plan that will allow the U.S. government to buy and sell crude oil from its national strategic oil reserves, and the funds obtained will be used to fund the electric vehicle infrastructure. On Monday (September 26), Democratic Rep. Frank Pallone, a Democratic Representative of New Jersey, joined hands with eight other Democratic lawmakers to propose the so-called "Buy Lowand Sell High Act." Under the bill, the U.S. president will have the right to designate a portion of the U.S. Strategic Petroleum Reserve (SPR) into the so-called "Economic Petroleum Reserve" and give the Department of Energy the power to trade oil in the EPR in a specific situation.
[Russian army continues to attack Ukrainian army targets Ukrainian army repels Russian attack]
Russian Ministry of Defense spokesperson Konashenkov reported on the 26th that the Russian Aerospace Forces have attacked Ukrainian army targets in the past 24 hours in the Donetsk area and Kharkiv area. In Nikolayev , the Russian army used high-precision missiles to strike a temporary Ukrainian artillery camp. In addition, the Russian air defense missile system also shot down several Ukrainian drones and intercepted various types of Ukrainian rockets. On the same day, the General Staff of the Ukrainian Armed Forces issued a notice stating that the Ukrainian army repelled the Russian attack near eight settlements including Bachmut and Soledal. The Ukrainian Air Force also launched strikes on several Russian personnel and military equipment assembly points and air defense missile positions on the same day.
Overall, the US dollar continues to strengthen and suppresses oil prices, with the probability of a global recession as high as 98%, aggravating demand concerns and oil prices maintain a bearish tone; however, due to the EU plan postponing to set an upper limit for Russian oil prices, and the United States plans to establish a new oil reserve plan, and the geopolitical tensions have intensified, oil prices may have a short-term rebound opportunity, so pay attention to API data and news about the new US oil reserve plan during the day.
This article is from Huitong.com
