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JPMorgan Chase: The Federal Reserve is expected to raise interest rates by 25 basis points in December 2026, compared with previous forecasts that interest rates would remain unchanged this year.July 30th - On Thursday, demand at the auction of Japanese two-year government bonds was lower than the 12-month average, as the market widely anticipated a tightening of monetary policy by the Bank of Japan. The subscription multiple was 3.63, compared to 4.82 at the previous auction, and the 12-month average is 3.81. Another sign of weak investor interest was the tail spread (the difference between the average bid and the minimum acceptable bid) at 0.007, compared to 0.005 last month. Recently, yields on short-term Japanese government bonds, which are more sensitive to monetary policy, have risen due to increased oil prices caused by tensions in the Middle East and heightened concerns about fuel inflation. The two-year yield has now risen to 1.47%, close to the high of 1.52% reached earlier this month. This further increases pressure on the Bank of Japan to raise interest rates.On July 30th, according to foreign media reports, Malaysian palm oil futures fell slightly on Thursday, marking their third decline in four trading days, mainly dragged down by weaker prices of competing edible oils and crude oil. The benchmark October palm oil contract on the Bursa Malaysia Derivatives Exchange fell 16 ringgit, or 0.34%, to 4,648 ringgit per tonne (approximately US$1,137.82) in early trading. Despite escalating tensions in the Middle East and the US-Iran conflict spreading beyond major fronts, oil tankers continued to leave the region, causing oil prices to give back some of their gains. Weaker crude oil futures reduced the attractiveness of palm oil as a biodiesel feedstock. The ringgit strengthened slightly by 0.07% against the US dollar, making it slightly more expensive for buyers holding foreign currency to purchase the commodity. According to documents from the Indonesian Ministry of Energy, the country has increased its 2026 biodiesel quota using palm oil as a feedstock to 16.75 million kiloliters to meet the increased demand from the B50 biodiesel blending policy launched earlier this month.Shunichi Suzuki, Secretary-General of the Democratic Party of Japan: The goal is to submit a tax reduction bill during the autumn Diet session.The bid-to-cover ratio for Japans 2-year government bonds was 3.63, lower than the 4.82 achieved in the previous issuance in June.

Concerns Over Shanghai's New Partial Lockdowns Weigh on Demand, Causing Oil Prices to Decline

Aria Thomas

Jun 10, 2022 11:13

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Oil prices dropped on Friday but remained near three-month highs, as concerns over new COVID-19 lockdown measures in Shanghai outweighed the United States' steady demand for fuels.


Brent crude futures for August dropped $1.01, or 0.8%, to $122.06 a barrel at 01:41 GMT, following a 0.4% decline the previous day. U.S. West Texas Intermediate crude for July lost 98 cents, or 0.8%, to $120.53 a barrel, after falling 0.5% on Thursday.


Brent was projected for a fourth consecutive weekly gain while WTI was projected for a seventh consecutive weekly gain, notwithstanding the recent price increases. Wednesday represented the highest closing for both benchmarks since March 8, when they reached their highest settlements since 2008.


Kazuhiko Saito, head analyst of Fujitomi Securities Co. Ltd., stated that Shanghai's new pandemic limitations have prompted concerns about China's demand.


"However, losses were limited by forecasts that the tight global supply will persist in the face of robust U.S. demand for fuels and a gradual increase in oil output by OPEC+," he said.


Shanghai and Beijing were placed on a new COVID-19 warning on Thursday, following the imposition of new lockdown restrictions and the announcement of mass testing for millions of inhabitants in China's greatest commercial hub.


China's crude oil imports surged about 12 percent in May from a low base a year earlier, despite the fact that refiners were still contending with large stockpiles due to COVID-19 lockdowns and a weakening economy, which weighed on fuel demand last month.


In the meantime, peak summer demand for gasoline in the United States continues to drive up oil prices. The United States and other nations have engaged in a series of releases of strategic reserves, but these have had a limited impact, as crude oil production has risen extremely slowly.


Last week, OPEC+, a group comprised of OPEC and producers such as Russia, agreed to accelerate supply increases in an effort to rein in soaring fuel costs and curb inflation. However, the business will be left with very little spare capacity and essentially no room to compensate for a significant supply disruption.


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