As of the close, the main contract of WTI crude oil fell 9.29% to US$22.76 per barrel, up about 13% during the session, reaching a high of US$28.36 per barrel; the main contract of Brent crude oil fell 4.14% to US$31.48 per barrel, up more than 10% during the session, reaching a

April 9, the market experienced a super Thursday.

As we all know, April 9 is the last trading day before the Easter holiday overseas. On this day, not only did the U.S. Congress release the initial unemployment benefit report for the week of April 4, but OPEC+ also held an emergency meeting on the same day to negotiate the issue of in-depth production cuts again. In addition, the Federal Reserve made another effort on the same day, announcing the launch of a $2.3 trillion measure to support local governments and small and medium-sized enterprises.

This is the largest production cut agreement since OPEC was established. It is not clear whether the production cut agreement is based on the US promised to cut production at the G20 meeting on Friday, but according to a representative, OPEC+ hopes that G20 countries other than OPEC+ will cut additional 5 million barrels per day.

G20 Energy Minister will hold an online meeting at 20:00 Beijing time on Friday, with Saudi Arabia as the presidency, the United States and other countries having the opportunity to consider and possibly participate in production cuts.

International oil prices rose and fell, and plunged in the late trading. The negotiation process of OPEC+ production cut meeting disappointed investors. As of the close, the main contract of WTI crude oil fell 9.29% to US$22.76 per barrel, up about 13% during the session, reaching a high of US$28.36 per barrel; the main contract of Brent crude oil fell 4.14% to US$31.48 per barrel, up more than 10% during the session, reaching a high of US$36.40 per barrel.

US stocks closed higher for the second consecutive day on Thursday. As of the close, the Dow Jones Industrial Average rose 285.80 points, or 1.22%, to 23,719.37 points, the Nasdaq rose 0.77%, to 8,153.58 points, and the S&P 500 rose 1.45%, to 2,789.82 points.

OPEC+ production cut agreement was reached, and oil prices were staged a super "roller coaster"

Previously, there was news that Saudi Arabia and Russia had reached an agreement on a significant production cut, and the production cut could reach as high as 20 million barrels per day.

U.S. President Trump said last week that he expects and hopes Saudi Arabia and Russia will cut oil production by 10 million barrels to 15 million barrels per day, accounting for 10% to 15% of the total global supply. Trump has not promised any action by American companies.

Li Wanying, senior energy chemical analyst at Donghai Futures Research Institute, told Futures Daily that the results of the meeting basically meet market expectations and the short-term impact on internal energy chemical varieties is neutral. In the medium term, the production cuts in OPEC countries will phase out the supply pressure. Considering that some independent shale oil companies in the United States have already shut down drilling, it is expected that the production of non-OPEC countries will also decline slowly in the later period. However, before the turning point of the global epidemic came, the production cut of 10 million barrels per day was difficult to fully hedge against the negative impact of the decline in consumption by 20 million barrels per day.

"The bottom support of the first phase of oil prices has appeared, but the further upward space in the future depends on when the epidemic will be fully controlled. Without other positive effects, it is expected that Bergamo oil will operate in the range of US$30-40/barrel in the future." Li Wanying believes.

Guotou Anxin Futures crude oil analyst Li Yunxu said that the confidence of this production cut agreement in the crude oil market is greater than the essence. According to the recent year-on-year decline in global crude oil demand may be as high as 20 million barrels per day, it is difficult to reverse the global oil accumulation situation under the influence of the epidemic, but the sharp reduction in supply pressure and the slowdown in the accumulation rate provide a time difference to wait for the epidemic to improve. On the other hand, the production increase atmosphere in March is already the most pessimistic time for the supply side expectations. OPEC+'s management of the expectation of long-term production cuts has greatly weakened the downward pressure on oil prices.

For the future market, Li Yunxu believes that the weakness of spot and near-month contracts will continue to suppress the gap between oil prices and month-on-month differences, and the impact of the epidemic on crude oil demand is difficult to recover in the short term, but the active and passive production cuts on the supply side will support the already low-valuation oil prices, and the probability of wide fluctuations at the bottom of oil prices is relatively high.In addition, it should also be noted that the number of active oil drilling rigs in the United States has dropped by more than 100 units in the past month and is still continuing. The contribution of new shale oil wells to plummet the decay of old wells may reduce the output in the second quarter to more than 2 million barrels per day on a month-on-month basis. Against the backdrop of a sharp reduction in supply side, if demand expectations can be seen in the near future, the upward elasticity of oil prices may be amplified.

Yang An, head of research and development of Haitong Futures Energy and Chemical Industry, believes that relying solely on production cuts cannot change the current surplus situation caused by the collapse of demand. Therefore, even if the strength of the production cut agreement exceeds market expectations, the impact will only be short-term and will only boost the market to a certain extent and cannot support the long-term rise of oil prices.

Li Wanying agrees with this. She believes that the market needs to focus on the trends in the United States, the actual implementation of production cuts, and the direction of the global epidemic. Specifically, in the United States, it is well known that the production cost of shale oil is higher than that of conventional crude oil, generally between US$35 and US$55 per barrel. It is precisely because of this that when the price of Brent crude oil fell below US$30 per barrel, the United States began to urge OPEC to reduce production. Although the United States did not directly participate in the OPEC+ meeting this time, before the meeting, the country sent stimulus signals such as forced production cuts to Saudi Arabia and other countries. After the meeting, the United States quickly welcomed the OPEC+ production cut agreement. In addition, there are also reports that White House social media director Scarvino said that US President Trump began discussing the crude oil agreement with Russian President Putin and Saudi Crown Prince after the meeting.

plus the continued low oil prices will make the global oil industry passively carry out "supply-side reform". For some high costs such as oil sands, deep-sea oil projects will first face the risk of being stopped; in addition, shale oil refers to the "price war" in the previous two years, and is expected to be hit.

In fact, the latest EIA data showed that US crude oil production fell by 600,000 barrels per day to 12.4 million barrels per day this week, and Baker Hughes' active drilling volume also showed a sharp decline. Many independent shale oil manufacturers have been significantly impacted, and some companies have even filed for bankruptcy. Under such circumstances, Li Wanying believes that although the United States has not yet stated that it will cut production, in the next few months, the low oil price environment will force related companies to shut down some old drilling with high cost and low oil yield. According to estimates, assuming that the country's shale oil drilling is closed by about half, the United States will see a drop in output of 2-3 million barrels per day. Of course, this part of the production cannot be immediately revealed, and it will still take 1-3 months, and the overall level of oil prices will also need to be considered. "Combined with the production cut agreement, we believe that a phased bottom for oil prices has been formed," said Li Wanying.

As for the implementation of production cuts, in her opinion, even if the supply gap that the United States may contribute is taken into account, compared with the global decline in crude oil consumption of 20-25 million barrels per day, there is still a certain gap between the two. In other words, in the next month of the important period of global anti-epidemic, the supply side temporarily lacks further positive boost.

In fact, Li Wanying believes that after this meeting, the upward action of oil prices depends on when the turning point of the global epidemic will arrive. After observing the models of some overseas industry experts, she found that the turning point of the epidemic may have to wait until the end of the second quarter. In the past two months, the focus of oil prices will be weak, regardless of potential "black swan" events such as geopolitical conflicts. Therefore, investors are advised to treat the results of this meeting rationally and pay attention to the epidemic situation carefully.

At the same time, she also said that at the current time point, from the perspective of the sustainability of oil storage, the depth contango curve some time ago boosted the global demand for low oil storage. However, as time goes by, the curve has been repaired, and the number of available storage tanks and floats is getting smaller and smaller, and the storage prices have also continued to hit new highs. Assuming oil prices rise rapidly in the short term, large companies will reconsider their oil hoarding layout. "So, we believe that there is little room for freight to continue to rise, and investors are advised to stop profit when the price is high," said Li Wanying.

As for energy and chemicals, considering the upward trend of oil prices brought about by the expected output cuts in recent times and the positive results of the improvement of the domestic epidemic, energy and chemical varieties such as fuel oil and PTA have regained their confidence in the upward trend. However, with the end of the OPEC+ meeting, Li Wanying believes that the positive support brought by oil prices will show a marginal decline.Therefore, after the positive price is over, the market still needs to focus on the impact on the demand side.

Take the polyester industry chain as an example. Textile and clothing exports account for an important proportion of my country's terminal consumption, while most of the counterparts such as the United States are still in the dilemma of the epidemic. According to CCF, the current situation of foreign trade orders is frequent, and new orders are also very light. Given this, foreign demand before the end of June is likely to be pessimistic. Therefore, after the cost speculation has come to a relatively end, she believes that various energy chemical varieties will also return to their own supply and demand fundamentals. It is recommended that investors grasp their positions in the near future and may face short-term high volatility risks.

The Federal Reserve launches a new round of stimulus measures

At 20:00 Beijing time on Thursday (April 9), the Federal Reserve announced a new measure: it will take measures to provide loans up to $2.3 trillion. Municipal (bond) liquidity measures can provide up to $500 billion in loans. Main Street loan facilitation measures can provide up to $600 billion in loans.

It is understood that the Fed's measures include details about major commercial lending plans, as well as several other measures taken to support the shaky U.S. economy. In addition, the Fed has provided more details about its market interventions, including plans to buy corporate bonds at an investment-grade level and purchase high-yield bonds (i.e. junk bonds).

According to the terms outlined for the first time, these loans will be for businesses with no more than 10,000 employees and no more than US$2.5 billion in 2019. Payment of principal and interest will be postponed for one year.

The Fed said the plans would total $2.3 trillion, including the Paycheck Protection Program and other measures designed to fund small businesses, as well as measures to boost municipal finance through a $500 billion loan program.

"The top priority of our country must be to respond to this public health crisis, provide health care for patients and limit the further spread of the virus." Federal Reserve Chairman Will said in a statement, "In a time of restricted economic activity, the role of the Federal Reserve is to provide as much relief and stability as possible, and our actions today will help ensure the ultimate recovery is as strong as possible."

These measures strengthen the already positive measures the Federal Reserve has taken to keep markets running and support the economy. The U.S. economy has been tied down due to preventing and controlling the spread of the coronavirus.

"The Fed's bold moves helped offset the more terrifying news in the job market. I would like to say that the strong action taken by the Fed today highlights the unlimited firepower that has helped to maintain the market calm this week," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

Federal Chairman Powell said Thursday that the Fed will continue to use all available tools until the U.S. economy begins to fully recover from the harm caused by the novel coronavirus pandemic, despite his acknowledging the Fed's limited power.

At the same time, the U.S. Department of Labor released the number of initial unemployment benefits that the week until April 4. The report said that the number of initial unemployment claims for the week ending April 4 was 6.606 million, with an expected 5 million, compared with the previous value of 6.648 million.

plus data from the past two weeks, the number of initial unemployment claims in the United States has exceeded 16 million in the past three weeks. If this data is compared with the 151 million employed people in the employment report last month, it is not difficult to find that since March, under the influence of the epidemic, the United States has lost 10% of its labor force in three weeks.

For today's data, some comments believe that in the past three weeks, the number of people applying for unemployment benefits in the United States has exceeded 15 million. As of the week ending April 4, the number of initial unemployment claims was about 6.6 million, a slight decrease from 6.87 million after the previous week's upward revision, but it still recorded more than 6 million for two consecutive weeks, as the United States still took strict prevention and control measures, causing the economy to stagnate.

Gregory Daco, chief American economist at the Oxford Economic Research Institute in New York, said the job market has entered a trauma period and the unemployment rate is expected to soar to 14% in April.

Previously, media reports said that in the unemployment situation during this epidemic, a special phenomenon occurred, that is, because the unemployment benefits that can be claimed after being fired are higher than their wages, many Americans voluntarily choose to be fired.Regarding this method of having to quit the job voluntarily and taking advantage of the state’s financial subsidies, experts said that it would not increase the financial burden, and some experts even encouraged this behavior of hiring subsidies. The reason for saying this is mainly because some economists say that in this process, let the federal budget pay wages first instead of letting the company bear it, so as to ensure that the company will not get deeply involved in debt and then lead to a credit crisis.

Due to the impact of the number of initial unemployment claims, the US dollar continued to suffer a sell-off, falling to 99.35 due to the three consecutive increases in the number of initial unemployment claims.

This article is from Futures Daily