At the beginning of the Asian market on October 11 (Tuesday), U.S. oil trading was around $90.63 per barrel; although oil prices rose to a new high since the end of August on Monday to a new high of $93.61 per barrel; it closed down nearly 2.5%, ending the upward trend for five consecutive trading days, investors were worried that the economic cloud might herald the recession of the global economy and hit fuel demand. The stronger dollar has also struggled with oil prices, and despite promises to cut production, Saudi Arabia's oil company (Saudi Aramco) has told at least seven Asian customers that they will receive the oil in full contract before the winter peak season arrives.
html focus within 4 days: G7 holds an emergency meeting on the conflict between Russia and Ukraine; EU holds an informal meeting of the energy ministers; ; due to the Columbus Day holiday on Monday, the EAPI data originally scheduled to be released at 4:30 on Wednesday and the EIA data released at 23:00 were postponed to 4:30 on Thursday and 23:00 on Thursday respectively.
negative factors affecting oil prices
[OPEC+ actual production cuts may only be 10% of the target]
OPEC+ decided last week to reduce oil production by 2 million barrels per day from November, with the reduction of about 2% of global supply. However, according to analysts, the organization's actual production cuts may be only one-tenth of the amount it has announced. Saudi , UAE and Kuwait will bear most of the production cuts, as other member states' oil production is already well below their quota, meaning they have met the new restrictions without having to reduce production. The crude oil output of
OPEC+ is far behind the planned level OPEC+ is far behind the planned level. Estimates of OPEC+'s September output show that its total output is about 3.6 million barrels per day lower than the planned level. When the new OPEC+ production target comes into effect in November, only eight member states were asked to reduce crude oil production, and in addition to Saudi Arabia, the UAE and Kuwait, there will also be minor cuts in South Sudan , Algeria , Gabon , Iraq and Oman . The total production cuts in these countries are 890,000 barrels per day. Although this is a significant reduction, there is still a gap from the overall production cut target.
US dollar strengthening also made oil prices struggle, with the US dollar rising for the fourth consecutive trading day. ? Despite pledging to cut production, Saudi Arabia's Petroleum Corporation (Saudi Aramco) has told at least seven Asian customers that they will receive the oil in full contract before the winter peak season arrives, according to people familiar with the matter.
[Feder Evans said policy makers basically agree on the path of rate hike ]
Chicago Fed Chairman Evans said there is a strong consensus within the Fed to raise the target policy rate to around 4.5% by March, and to keep interest rates at that level as the Fed evaluates its impact on inflation and provides time for recovery for supply chains. Only when the data to be released fundamentally "shake" current forecasts can the Fed change this plan. Evans said the plan will put the Fed's policy at a historically able to control prices after adjusting to expected inflation.
[WB President and IMF Presidents believe that the global recession risk is rising]
World Bank President Malpass and International Monetary Fund (IMF) President Georgieva warned that the risk of a global recession is increasing, and said that inflation remains a persistent problem after Russia invaded Ukraine. The two leaders said the slowdown in the developed economies’ growth, rising interest rates, climate risks and the continued high food and energy prices hit developing countries particularly hard, calling for coordinated action to help emerging markets.
[Hungary and Serbian will build new oil transportation pipelines to evade EU sanctions]
On October 10th local time, Kovács Zoltan, spokesperson for international affairs of the Hungarian government and secretary of state for international exchanges and relations, said that since the oil transportation route from Russia to Serbia through Croatia is subject to EU sanctions, Hungarian Prime Minister Orban and Serbian President Vucic have reached an agreement to build a new oil pipeline to connect with the original Druzhba pipeline to supply cheaper Russian Ural crude oil to Serbia.
[The residual gas emissions of "North Stream" are further reduced]
On October 10th local time, the Swedish Coast Guard said that according to the latest observation on the 9th, the remaining gas emissions of the " Nord Stream-2" natural gas pipeline have been further reduced, and the emission diameter is now about 15 meters.
[Investors are worried about the impact of rising interest rates US stock fall]
US stock market fell on Monday, Nasdaq index hit its lowest closing point since July 2020, as investors are worried about the impact of rising interest rates.
Federal Vice Chairman Breenard (Lael Brainard) said that the impact of the tightening of monetary policy has begun to be reflected in the economy, and the economy may slow down faster than expected, but the full impact of interest rate hikes will not appear until several months.
Despite growing concerns that the Fed's rate hike could push up unemployment, Chicago Federal Reserve Chairman Evans continued to support the Fed's efforts to reduce inflation, saying that while this sounds "optimistic", he believes it can be done "without recession."
, CEO of Longbow Asset Management in Tulsa, Oklahoma, said, "People are worried about the economy. People are worried about a possible recession."
, Nvidia fell 3.4%, while , Qualcomm , , Micron and Ultramicro Semiconductors closed lower. Investors are also cautious before the start of the third-quarter U.S. financial report season, which will kick off on Friday, with some major banks releasing quarterly reports on the same day.
In recent weeks, estimates for third-quarter performance have declined. Analysts now expect S&P 500 company's year-on-year profit growth for the quarter, compared with an expected 11.1% increase in early July, according to IBES data from Refinitiv .
Microsoft fell 2.1%, one of the biggest factors that dragged down the three major indexes. technology stocks and energy stocks in the S&P 500 led the decline of each sector. Investors are still waiting for this week's U.S. inflation data. The U.S. Treasury market closed on Monday due to the Columbus Day holiday.
Positive factors affecting oil prices
[After Russia's retaliatory air strike against Ukraine, Ukraine vowed to strengthen its armed forces]
Russia launched the largest air strike since the war began on cities across Ukraine on Monday morning, killing 12 people and injuring dozens of people, forcing thousands of people to flee to air raid shelters, and prompting Kiev to stop exporting electricity to Europe. Ukraine has since vowed to strengthen its armed forces. Ukrainian officials said explosions have been reported in many places in Kiev, Lviv, Dnipro and other places in Ukraine. The dozens of cruise missiles launched from the air, land and sea are at least the widest range of air strikes on targets far away from the front since the outbreak of the war. U.S. President Biden condemned Russia's massive missile attack in Ukraine and vowed that the United States and its allies would continue to make Moscow pay the price. Biden and G7 leaders will hold an online meeting on Tuesday to discuss their commitment to support Ukraine.
[Russian parliamentarians say special military operations have entered a new stage]
Russian Federation Commission ( Russian Parliament Upper House ) Chairman of the National Defense and Security Committee, Bondalev, said on the 10th that the Russian army's large-scale strike on Ukrainian energy, military and communication facilities after the Crimea Bridge explosion marks a new stage of Russia's special military operations. Bondalev said that the Russian army will take more decisive actions in the new stage.
[ Iran does not accept pressure on the Iran nuclear negotiations by the United States and the West through Iran’s internal affairs issues]
On October 10th local time, Iran’s Foreign Ministry spokesman Kanani said at a press conference that Iran is still willing to continue negotiations on the Iran nuclear agreement, but he firmly does not accept pressure on the United States and Western countries through Iran’s internal affairs issues. Kanani said, "With the Iranian nuclear agreement, Iran's approach is still to stick to the path of negotiations and reach a stable agreement with Iranian interests. We stress that we are ready to engage in bilateral interactions with all parties on the basis of mutual respect. We also stress that we will firmly oppose any attempt by either party to make Iran concessions with new sanctions, and we cannot tolerate any interference in Iran's internal affairs."
Overall, the strengthening of the US dollar suppresses oil prices, and the global economic recession and fights fuel demand has increased. The actual production cut of OPEC+ may only be 10% of the target. Under multiple negative pressures, oil prices fell; but it should be noted that after Russia's retaliatory air strike against Ukraine, the tensions in Russia and Ukraine further escalated, the risk of geopolitical uncertainty is extremely high, and oil prices may fluctuate greatly during the session, so we need to trade with caution.
This article is from Huitong.com
