In the early trading on Tuesday, crude oil-based varieties fell sharply, with the main contract of crude oil falling by 5.1%, and the price fell to 540 yuan per barrel at the lowest, hitting a new low in the past 10 months; in addition, low-sulfur fuel fell by 5%, and fuel oil, PTA and other declines exceeded 3%.
So what exactly caused the market to fall sharply, and where should the subsequent trend go?
Several economic data are better than expected! The US dollar strengthened and returned above 105
Latest data shows that the US ISM non-manufacturing PMI in November was 56.5, with the previous value of 54.4 and expected to be 53.1. The monthly rate of durable goods orders in the United States rose 1.1% after revised monthly rates in October, compared with a previous increase of 1%. US factory orders rose 1% month-on-month in October, with expectations rising 0.7% compared with the previous value of 0.3%.
Affected by the better-than-expected US economic data, the expectation of Fed further maintaining tightening was strengthened, and the US dollar index rebounded and returned to above 105, posing a strong negative suppression on commodities such as crude oil and fuel oil!
Nick Timiraos, known as the "New Fed News Agency", wrote that Fed officials have hinted that they plan to raise the benchmark interest rate by 0.5 percentage points at next week's meeting, but rising wage pressure may cause them to continue to raise the benchmark interest rate to higher than the market's current expectations.
According to CME's "Feder Observation": the probability of the Federal Reserve hike of interest rates by 50 basis points to the range of 4.25%-4.50% in December is 79.4%, and the probability of 75 basis points hike rate is 20.6%; the probability of 75 basis points hike rate by February next year is 37.1%, the probability of 100 basis points hike rate is 51.9%, and the probability of 125 basis points hike rate is 11.0%.
remains weak due to demand Saudi Arabia lowers the price of oil sold to Asia in January next year
Last night, Saudi Arabia announced that it would lower the price of oil sold to Asia in January next year, which to a certain extent had an adverse impact on oil prices.
Saudi Arabia's state-owned holding lowered the price of Arab lightweight sold to Asia by $2.20 next January, to a higher regional benchmark price of $3.25 per barrel, the lowest level since March. Refiners and traders had expected the oil price to fall by $2.10.
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Just the day before Saudi Aramco made this decision, OPEC and non-OPEC oil-producing countries announced that it will maintain the oil production quota unchanged. In addition, Saudi Aramco has lowered most of its oil prices for European customers, while prices for American customers remain unchanged.
In addition, last week, EU governments temporarily agreed to the price cap of Russian sea oil transportation of US$60 per barrel.
In response, many countries responded to "Russia oil price limit": Japan said it would synchronize with the EU and set a price limit on Russian crude oil; South Korea will continue to negotiate with relevant countries; India said that the impact of price limit on India is "zero", and said it would purchase oil from any country that needs to purchase. British media said that the price limit effect is limited and Europe may suffer from its own consequences.
However, the White House said it firmly believes that the upper limit of oil prices for Russia will lock in discounts on Russian oil; the upper limit of price will not have a long-term impact on global oil prices.
Where will the oil price go in the future?
Fitch lowered European TTF natural gas prices from 2022 to 2023 and US Henry Hub natural gas prices in 2022, reflecting the decrease in European natural gas demand. It still expects no Russian natural gas to flow into the EU in 2023. In terms of oil prices, Fitch expects oil prices to continue to be moderate due to slowing economic growth. The agency continues to expect OPEC+ to achieve a broad balance in the oil market by changing production quotas and existing crude oil supplies.
Nanhua Futures analysis pointed out that the recent OPEC meeting was implemented, insisting that the production cut plan remained unchanged and the EU reached an agreement on the upper limit of sanctions against Russia. In the short term, the supply side may face further shrinkage due to the EU's sanctions against Russia. In the medium and long term, OPEC continues its production cut plan, the market lacks positive energy for supply, and the market supply tension pattern remains unchanged. From the perspective of demand, the relaxation of domestic epidemic controls boosted demand, and the suppression of the economy by the Federal Reserve's interest rate hike is still intensifying. In the short term, oil prices are at risk of falling. If it falls, it is recommended to place long orders near US$72 in the US oil.
