[Epoch Times October 05, 2021](Epoch Times reporter Zhang Dongguang comprehensive report) International oil prices rose sharply on Monday (4th). West Texas crude oil closed at 77.62 US dollars per barrel, up 2.3%, and once rushed to 78.36 US dollars during the session. In the past seven years, West Texas crude oil has risen by 60% this year. At the same time, Brent crude oil also rose 2.5% to close at $81.26 per barrel, an increase of 57% this year.
The long-lost US$80 mark on the Brent Crude Oil Station mainly reflects the original market expectation that OPEC+ may expand production to stabilize oil prices, but it backfired. The oil country organization decided to increase production by only 400,000 barrels per day in the next six months, which is the same as the previous resolution, which triggered price chasing by traders.
Previously, oil prices have been steadily rising due to the shortage of natural gas in Europe and the power outage crisis caused by insufficient coal burning in China. On Monday, West Texas crude oil broke the previous high of US$76.98 per barrel on July 6, indicating that the rising trend of oil prices has broken through. It is shown that high prices may continue in the near future.
Before the outbreak of the epidemic, the active exploitation of shale oil in the United States became the main source of the downward trend in oil prices and made the United States the world‘s largest oil producer. However, after the epidemic, the mentality of industry players has changed. Most US oil companies would rather repay the accumulated surplus or distribute shareholders than increase investment in drilling exploration activities. The U.S. Department of Energy estimates that the current U.S. crude oil production is 11.08 million barrels per day, which will reach 11.72 million barrels in 2022, but it is still lower than the 2019 peak of 13 million barrels.
In addition to rising oil prices, natural gas prices continued to rise by 2.6% on Monday. Oil company stock prices rose with the tide. Devon Energy surged 5.3%, becoming the brightest gainer among the S&P 500 stocks. Marathon Oil rose 4.1%, and Exxon Mobil also The rise of 1.29% was a counter-trend rising stock that fell in the broader market.
Motivated by rising oil prices, the US 10-year bond yield, which is closely related to price expectations, rose from 1.47% to 1.49% on Monday. Wall Street experts predict that the yield rate may rise to 1.6% to 1.8% before the end of the year, which mainly reflects that the Fed will reduce the scale of bond purchases in November and that inflation expectations are also rising, which may prompt the Fed to raise interest rates earlier.
Since September, U.S. stocks have been hit by China Evergrande’s default, European gas shortages, and China’s power outage crisis. Now they are facing the threat of soaring oil prices in October. Investors worry that consumer spending may slow down due to the threat of inflation, and the company’s gross profit It may also continue to be compressed due to supply chain shortages, which has led investors to be pessimistic in the face of negative factors recently. The buying orders that have been involved in bargain hunting have been offset by the force of negative downsizing.
The continuous high oil prices have panicked stock market investors and feared higher inflation. The Nasdaq, which represents technology stocks, plunged 2.12% on Monday to close at 14,255 points, the lowest price since July, and the historical peak since September. It fell back by 7.5%, becoming the hardest hit area for U.S. stocks, led by technology giants such as Apple, Facebook, Amazon, and Microsoft. Some experts believe that under the background of soaring oil prices, the economic cycle stocks at the beginning of the year regained the mainstream. Technology stocks shifted to traditional business cycle stocks.
The sharp rise in oil prices also reflects that the global epidemic has been substantially reduced recently and economic activities will return to normal, but it also reflects that the recovery of the global supply chain system is still unable to keep up with the recovery of demand. The Bank of America predicted last week that the international oil price may rush to 100 US dollars per barrel under the current background. If so, this will once again threaten the outlook for global inflation, and the anxiety of stock market investors may continue for some time.
Editor in charge: Ye Ziwei#
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