During the Asian session on Tuesday (October 5), oil prices hovered around 77.59. Oil prices rose on Monday. U.S. oil rose to 78.38 US dollars per barrel, the highest level since 2014; Burundi oil once rose to 82 US dollars per barrel, a three-year mark The highest level since; OPEC+, which was formed by the Organization of Petroleum Exporting Countries (OPEC) and Russia-led oil-producing allies, confirmed that it will adhere to the current production policy due to the rebound in demand, even though some countries demand increased production.
During the day, we will focus on the US trade account in August, the US September ISM non-manufacturing PMI, and the announcement of changes in US API crude oil inventories for the week ending October 1 at 4:30 on Wednesday.
Bullish factors affecting oil prices
[OPEC+ maintains its monthly production increase of 400,000 barrels/day plan unchanged]
According to the OPEC+ statement, in a short video conference on Monday, ministers from member states approved plans to increase production by 400,000 barrels a day in November. The market had previously speculated that OPEC+ might choose to increase production more significantly in November, but according to the representative, no such proposal was made at the meeting.
Analysts said that they expect the uncertainty of the impact of new coronavirus variants on demand and the possibility of new damage to the economy, putting pressure on OPEC+’s decision-making.
At present, Saudi Arabia’s oil production is close to the level before the outbreak, and its oil revenue is the highest since 2018. Other member states basically follow the plan to gradually restore idle production capacity every month. According to an unnamed US official, Washington is also satisfied with the current pace of production increase.
Amrita Sen, chief oil analyst and co-founder of the consulting firm Energy Aspects, said that this means that Saudi Arabia hopes that “the less the better the monthly production plan changes.” According to the statement, OPEC+ member states will hold another production meeting on November 4.
Goldman Sachs Energy Research Director Damien Courvalin said that due to the conversion of energy consumption, there will be an additional 650,000 barrels of oil demand per day later this year, and oil prices will reach their highest level in seven years. Inventories are about to fall to a 10-year low, which laid the foundation for another significant increase.
In addition, the increase in oil prices was also driven by a greater increase in natural gas prices. The soaring price of natural gas has prompted people to turn to fuel oil and other crude oil products to generate electricity and meet other industrial needs.
[WTO raises global economic forecasts for this year and next year]
The WTO has raised its forecasts for global trade growth in 2021 and 2022 to 10.8% and 4.7%, respectively, on the grounds that economic activity has recovered in the first half of this year.
WTO Director-General Oconjo Iweala said that if it can reach the forecast for 2021, it will be the largest year-on-year growth rate since 2010. “Trade is a key tool in the fight against the new crown epidemic. This strong growth highlights the important role that trade will play in the recovery of the global economy.”
[Serious crude oil spill on the southern coast of California, USA]
A serious crude oil spill occurred on the coast of Orange County in Southern California. As of noon on the 3rd, a pollution zone of nearly 35 square kilometers had been formed on the sea. The environment poses a serious threat.
According to the Orange County Government, the source of the leak was a crude oil transportation facility in waters under the jurisdiction of the US federal government, about 5 kilometers from the coast.The local government department received a report of a crude oil spill for the first time on the 2nd. As of noon on the 3rd, the problem has not been resolved. A pollution zone of nearly 35 square kilometers has been formed on the sea, and the crude oil has leaked.The volume reaches 126,000 gallons.
Negative factors affecting oil prices
[Technology stocks plummeted under the threat of continued high inflation]
The US stock market fell on Monday, and technology stocks plunged again due to the threat of persistently high inflation. The S&P 500 Index fell 1.3%, breaking below the 100-day moving average; the Nasdaq 100 Index fell 2.2%, the Dow Jones Industrial Index fell 0.9%, and high-growth technology stocks led the decline, including Amazon Technology and Facebook Inc., Vaccine manufacturers’ stock prices also fell due to Merck’s announcement of an effective new crown drug; energy stocks followed the rise in oil prices.
Deutsche Bank strategist Jim Reid said in a report: “We are facing energy crisis, supply chain problems, rising inflation, signs of slowing economic growth, and a lot of discussion about stagflation,” as investors’ worries heat up. , The global market has also turned to risk aversion, and at the same time, investors are also preparing for the Fed to start reducing its stimulus as early as next month.
Brian Price, head of investment management at Commonwealth Financial Network, said, “Technology stocks are most likely to be hit the most, because rising interest rates mean higher discount rates for future earnings. As long as inflation expectations remain high, I expect this trend to continue.”
[The loss of the global aviation industry due to the epidemic is expected to exceed US$200 billion]
According to major lobbying groups in the aviation industry, the pressure on business and long-distance flights caused by travel restrictions will continue until 2022, and the aviation industry’s losses caused by the new crown epidemic will exceed US$200 billion.
The International Air Transport Association (IATA) said at its annual meeting in Boston on Monday that airlines are expected to incur a total loss of $11.6 billion next year. The organization also raised its loss forecast for this year and revised up its 2020 loss.
According to IATA data, the total net loss of US$20.1 billion during the epidemic exceeded the industry’s cumulative profit in the past 9 years. Although domestic and regional travel has begun to rebound, the global business travel business, which is vital to many airlines, has hardly recovered.
The United States is set to open its borders to transatlantic visitors next month, but other long-distance markets remain sluggish, especially those connecting Asia with Europe and North America.
IATA Director General Willie Walsh said at the largest executive meeting in the industry in more than two years, “The scale of the crisis caused by the new crown epidemic to the aviation industry is huge,” “People have not lost their desire to travel, just like we are in the domestic market. As seen in solid resilience. But they are hindered by the restrictions, uncertainty and complexity of international travel.
The passenger flow is expected to reach 40% of the pre-epidemic level this year, and this proportion will rise to 61% by 2022, when the total number of passengers will reach 3.4 billion. This is similar to the 2014 data, but it is down by about a quarter from 2019.
On the whole, given the demand situation and the results of the OPEC meeting, the surge in natural gas prices is good for oil prices. The overall bullish sentiment of the crude oil market is high. Pay attention to API data. If the data shows that the inventory is reduced, US Oil may be pointed at 80 US dollars per barrel.
At 8:18 Beijing time, US crude oil is now quoted at 77.68 US dollars per barrel.