On January 26 (Thursday) at the beginning of the Asian market, U.S. oil traded around $80.52 per barrel; oil prices fluctuated above the 80 mark on Wednesday, NATO increased military aid, exacerbated the crisis in Ukraine, and geopolitical tensions supported oil prices. Data showing U.S. crude stockpiles rose less than expected, offsetting weak economic data from Tuesday.
During the day, focus will be on the number of Americans filing for unemployment benefits in the week ended January 21, and the initial monthly rate of wholesale inventories in the United States in December.
Bullish factors affecting oil prices
[U.S. crude oil inventories increased less than expected last week]
U.S. crude oil and gasoline inventories rose last week, the U.S. Energy Information Administration (EIA) said on Wednesday, citing weak demand for fuel products. Crude inventories rose by 533,000 barrels last week to 448.5 million barrels, missing expectations for a rise of 1 million barrels.
said Phil Flynn, an analyst at Price Futures Group. “The increase was much smaller than expected, raising concerns about supply constraints,” the EIA said. U.S. gasoline inventories rose by 1.8 million barrels last week to 232 million barrels, the EIA said. Total refined product supply, a proxy for fuel demand, fell by 867,000 bpd.
Elsewhere, refinery capacity utilization rose 0.8 percentage point to above 80%, after falling the previous week to its lowest level since March 2021.
Refining runs rose by 128,000 bpd last week, the EIA said, as refiners reopened after winter storms idled some production at plants.
Distillate stockpiles, which include diesel and heating oil, fell by 500,000 barrels for the week to 115.3 million barrels, compared with expectations for a drop of 1.1 million barrels, the EIA data showed. Typically, during the northern hemisphere winter, distillate consumption increases due to heating needs.
Crude inventories at the Cushing, Oklahoma delivery hub rose by 4.3 million barrels last week, while net U.S. crude imports fell by 1.79 million barrels per day, the EIA showed.
[The United States and Germany will provide Ukraine with dozens of the most advanced main battle tanks to help it fight against Russia]
The United States said on Wednesday it would provide Ukraine with 31 of its most advanced main battle tanks, after Germany broke a taboo by announcing a similar decision, moves Kyiv hailed as a possible turning point in its war against Russia. A Biden administration official said more U.S. allies are expected to announce armored vehicle supplies to Ukraine.
[About 6,000 employees at Berlin Airport in Germany go on strike]
On January 25, local time, about 6,000 employees at Berlin-Brandenburg International Airport in Germany went on strike, demanding higher wages and better working conditions. The German service industry trade union previously announced that the strike was a warning strike and would last from 3:30 a.m. to 23:59 a.m. on the 25th. The airport operating company stated that due to the strike, all commercial passenger flights will be canceled that day, and the travel of about 35,000 passengers will be affected.
[NATO increases military aid, exacerbating the crisis in Ukraine]
Recently, many NATO countries have increased their military aid to Ukraine. Analysts pointed out that as NATO countries increase their military aid to Ukraine, the crisis in Ukraine will further intensify. After entering the winter, both Russia and Ukraine have made no significant progress on the battlefield. Some Western military experts believe that both Russia and Ukraine may be preparing for the spring offensive. Analysts believe that as NATO countries increase their military aid to Ukraine, especially if Germany and the United States provide Ukraine with main battle tanks, the crisis in Ukraine may further intensify.
Russian President’s Press Secretary Peskov said on the 20th that the current crisis in Ukraine is spiraling upwards. NATO countries are increasingly involved in the conflict indirectly, even directly. Western countries supplying Ukraine with heavy weapons will not fundamentally change anything, it will only increase problems for Ukraine. Russian Deputy Foreign Minister Ryabkov said on the 23rd that the supply of advanced weapons to Ukraine by Western countries may lead to “unforeseen consequences.” The new round of arms supply from the US and the West to Ukraine, especially the supply of heavy weapons, will inevitably aggravate the situation on the battlefield.
[Iran announces sanctions against some entities and individuals in the EU and the UK]
On January 25, local time, the Iranian Ministry of Foreign Affairs announced sanctions against some entities and individuals in the European Union and the United Kingdom; Iranian Foreign Ministry spokesman Kanani issued a statement saying that the United States has “countless” hostile actions against Iran, including supporting terrorism, “Extreme pressure” and unilateral sanctions on Iran. The oppression and crimes inflicted by the United States on the Iranian people show the hypocrisy of the US authorities and the attitude of “politicizing” human rights issues.
Bearish factors affecting oil prices
[U.S. stocks S&P 500 index fell slightly, weak corporate financial forecasts exacerbated recession fears]
The S&P 500 closed slightly lower on Wednesday as a series of dismal to dismal corporate earnings reignited concerns about the economic impact of the Federal Reserve’s restrictive policies.
All three major U.S. stock indexes clawed back losses throughout the afternoon, closing well off session lows, with the blue-chip Dow struggling to close slightly higher in the final minutes.
As the first major technology company to announce its quarterly results, Microsoft issued a bleak financial forecast, which issued a red alert to other large-cap technology stocks that have not yet announced their results. The Nasdaq index, which is heavily loaded with technology stocks, was dragged down.
Chuck Carlson, chief executive of Horizon Investment Services, said, “these days are up and down, indicating that there is a tug of war going on, and from the perspective of the Fed’s actions are playing out, the gloomy forecast is good news. Anyway, Microsoft earnings were the catalyst for the market today,” Carlson added, “Corporate earnings are important, but it’s the Fed rate/inflation story that really gets the market’s attention.”
The fourth-quarter earnings season is well into its peak, with 95 companies in the S&P 500 reporting results. According to Refinitiv data, 67% of results beat analysts’ average forecast, well below the average of 76% over the past four quarters.
Analysts now expect total earnings for S&P 500 companies to fall 3.0 percent in the fourth quarter from a year earlier, nearly double the 1.6 percent decline forecast on Jan. 1, according to Refinitiv data.
[The probability that the Federal Reserve will raise interest rates by 25BP in February is 99.8%]
According to CME “Fed Watch”: the probability of the Fed raising interest rates by 25 basis points in February to the range of 4.50%-4.75% is 99.8%, and the probability of raising interest rates by 50 basis points is 0%; the probability of raising interest rates by 25 basis points by March It is 17.4%, the probability of a cumulative rate hike of 50 basis points is 82.5%, and the probability of a cumulative rate hike of 75 basis points is 0%.
Overall, the increase in inventory was lower than expected; NATO increased military aid, exacerbated the crisis in Ukraine, and Iran announced sanctions on some entities and individuals in the European Union and the United Kingdom, all of which increased the risk of uncertainty in the geopolitical situation, supported oil prices, and maintained a volatile upward view , Focus on US economic data within the day.
At 10:31 Beijing time, U.S. crude oil was trading at $80.52 a barrel.