During the Asian session on Monday (September 20), U.S. crude oil hovered around 71.62, and oil prices fell last Friday, as energy companies in the Gulf of Mexico restarted production after the ensuing hurricane in the region stopped production; last week, Buren The price of special crude oil rose by 3.3%, and the price of US crude oil rose by 3.2%, thanks to the hurricane interruption leading to tight supply.
Note: Due to the Mid-Autumn Festival, some Asian markets are closed
Negative factors affecting oil prices
[The S&P 500 index hits the largest decline in a month]
The S&P 500 index in the US stock market recorded its biggest decline in nearly a month on Friday. Investors are concerned about the delta strain and Asian risks, and are assessing the resilience of the global economic recovery.
The S&P 500 index fell 0.9%, which coincided with the quarterly expiration date of options and futures contracts that often cause market volatility. Materials, utilities and technology sectors led the decline. The index fell below the 50-day moving average. This key technical level has provided support for many times this year.
The Nasdaq 100 index, which has a relatively high technology stake, tumbled 1.2%, the biggest drop since May.
Gina Martin Adams of Bloomberg Industry Research wrote in the report, “September started with a typical market. In the face of potential Fed policy changes, slowing economic growth and disturbingly high inflation, it is difficult for the stock market to remain optimistic.”
The initial value of the University of Michigan Consumer Confidence Index showed that US consumer confidence rose slightly in early September, but it was still close to a 10-year low. At the same time, due to high prices, the purchasing status index fell to its lowest level since 1980.
Randy Frederick, Managing Director of Trading and Derivatives at Charles Schwab, said, “We are not necessarily in a period of many negative catalysts. We are in a period of lack of positive factors.” “Before getting positive factors such as company earnings, the market There may not be huge upside momentum.”
[U.S. consumer buying prosperity index fell to its lowest level in more than 40 years]
Consumer confidence in the United States rose slightly in early September, but it was still close to its lowest point in the past decade, and due to high prices, the buying boom deteriorated to its worst level since 1980.
Data released last Friday showed that the initial value of the University of Michigan Consumer Confidence Index rose slightly to 71 from 70.3 in August, which was lower than the median forecast of 72 economists surveyed by Bloomberg.
Buying popularity for durable household goods, homes and cars all fell to their lowest values in decades. According to the report, the main reason for the decline in buying gas is that consumers believe that prices are too high. They expect the inflation rate to rise by 4.7% in the next year, reaching the highest level since 2008.
As economic activity slows, the spread of the delta mutant strain has weakened consumer confidence, causing economists to lower their third-quarter growth forecasts. Concerns about rising prices have also reduced consumer confidence in recent months.
Richard Curtin, who is in charge of the investigation, said in a statement, “Although older, poor, and less educated families still repeatedly mentioned the decline in living standards, young, wealthy, and more educated families in the past I also complained about the high prices for a few weeks.”
The current conditions indicator fell from 78.5 to 77.1, the lowest since April 2020. According to the survey conducted from August 25 to September 12, the expected indicator rose from 65.1 to 67.1. Although respondents became more optimistic about the short-term outlook for the economy and its financial situation in early September, consumer confidence has weakened in recent months. The report shows that consumers’ long-term economic outlook has dropped to a 10-year low.
[Russia plans to increase overseas oil sales to drag down oil prices]
Interfax news agency reported that Russia will increase oil exports by 3% in the fourth quarter; at the same time, the rise in the dollar has reduced investor interest in dollar-denominated commodities.
Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said, “The price increase in the energy market has caused demand to be disrupted. There is also Russia’s plan to increase global oil sales.”
[The Gulf of Mexico begins to resume crude oil exports]
After hurricanes “Nicholas” and “Ada” reduced offshore oil production by 26 million barrels, the Gulf of Mexico began to resume crude oil exports. US energy companies added oil and gas rigs for the second consecutive week last week, although the number of offshore rigs in the Gulf of Mexico remained unchanged after Hurricane Ida hit the coast two weeks ago.
Baker Hughes said that as an early indicator of future production, the number of active oil and gas drilling rigs increased by nine in the week ending September 17, to 512, the highest level since April 2020.
Rystad Energy’s oil market analyst Nishant Bhushan said: “Oil prices have reached such high levels in the past few days, apparently due to supply disruptions and reduced inventories, so now U.S. oil production is recovering and oil prices are falling as expected.”
Edward Moya, senior market analyst at OANDA, said, “Oil prices have weakened slightly, and U.S. offshore crude oil production has continued to slowly recover, while most of Asia has encountered some obstacles in the process of returning to normal, and some countries are still working to contain the spread of the Delta variant virus.”
[Iran may hold talks on the resumption of the nuclear agreement on the sidelines of the United Nations General Assembly in New York]
Saeed Khatibzadeh, spokesman for the Iranian Ministry of Foreign Affairs, said that Iran may hold talks with world powers on the resumption of the 2015 nuclear agreement on the sidelines of the UN General Assembly meeting next week.
Khatibzadeh told reporters at the press conference that Iranian Foreign Minister Hossein Amirabdollahian will travel to New York on Monday and will meet with representatives of the nuclear agreement member states “if such a meeting is useful.” Amirabdollahian has no plans to meet with US officials in New York, but will Separate meetings with foreign ministers of countries that are still in the nuclear agreement.
Bullish factors affecting oil prices
[Oil price will hover around 70 US dollars per barrel at the beginning of next year]
Iraqi Oil Minister Isan Abdul-Jabbar told reporters in Baghdad on Sunday that the price of oil is expected to be around US$70 per barrel in the first quarter of next year, due to the steady increase in OPEC+ supply and the continued increase in demand from the new crown virus. When the epidemic resumes, the market will remain balanced in the future. “The world economy is gradually recovering,” however, he said that it is too early to determine whether OPEC+ will stick to its plan to increase crude oil production by 400,000 barrels per day in November. The final result will be confirmed at the OPEC+ meeting on October 4; He said that OPEC+ ministers will “discuss the market situation during the meeting.”
As the market showed signs of tightening, Brent crude oil futures rose more than 3% last week to US$75.34 per barrel. Earlier last year, with the spread of the epidemic, OPEC began an unprecedented reduction in production, which is currently slowly relieving. Kareem Abdul-Jabbar said Iraq may export 3.3 million to 3.4 million barrels of crude oil per day this month, including crude oil from the semi-autonomous northern region of Kurdistan. He said the government hopes that once the pandemic subsides, the price will remain above US$65 per barrel.
According to many Iranian media reports, on the 19th local time, a natural gas pipeline explosion occurred near the Hoyze Marsh in the western province of Khuzestan in Iran, causing one death and two injuries.
Generally speaking, the gradual recovery of crude oil production in the Gulf of Mexico has suppressed oil prices, but oil prices this week may be more affected by factors related to Iran’s nuclear negotiations. In addition, attention should be paid to the impact of geopolitical conditions on oil prices.
At 8:15 Beijing time, US crude oil is currently quoted at US$71.64 per barrel.