During the Asian session on Friday (October 8), U.S. crude oil hovered around US$78.70 per barrel. Oil prices stopped falling and rebounded on Thursday. U.S. oil rose nearly 2.5% and Bursa oil rose more than 2.0%, as the U.S. Department of Energy said on Thursday, "Currently," there is no plan to release strategic oil reserves to curb the rise in gasoline prices.
In the days, we will focus on China's September Caixin Service Industry PMI, US September non-agricultural employment data, US President Biden's speech on the September employment report, and the announcement of the total number of drilling rigs in the United States for the week ended October 8 at 1:00 on Saturday.
Bullish factors affecting oil prices
[U.S. stocks closed higher as concerns about debt ceiling and energy crisis eased]
The U.S. stock market rose on Thursday as the U.S. debt ceiling negotiations have made progress and concerns about the energy crisis in Europe have eased. The S&P 500 index rose by 1.5% at one time, and then gave up nearly half of the gains. The raw materials and consumer discretionary sectors led the gains; the U.S. 10-year Treasury bond yield climbed to 1.57%, the highest since June. The Starck 100 index rose 0.9%.
The bipartisan leaders of the Senate reached an agreement to temporarily raise the debt ceiling until early December, boosting the market. The Chicago Options Volatility Index fell 7% to 19.5, lower than the one-year average of 21.2. In addition, natural gas prices fell on Thursday, indicating that Russia may Increase supply to Europe.
Chris Gaffney, President of TIAA Bank’s Global Markets, said, “The market volatility that we have seen this week-one day up and one day down, actually reflects the news cycle and the different news we receive.” The next focus is the US non-agricultural employment announcement on Friday. Data, this may reveal clues to the Fed's cut-down schedule. Fed Chairman Powell said that he hopes employment will have "good" growth, and more and more people are optimistic that this report will show this situation.
[The number of people claiming unemployment benefits for the first time in the United States last week fell more than expected]
The general decline in the number of people applying for unemployment benefits for the first time in the United States last week indicated that the labor market continued to improve. According to data released by the Ministry of Labor on Thursday, as of the week ending October 2, the number of people claiming unemployment benefits for the first time totaled 326,000, a decrease of 38,000 from the previous week. Economists surveyed by Bloomberg expected the median to fall to 348,000. As of the week of September 25, the number of continuous claims for unemployment benefits decreased to 2.7 million.
As the economy improves and companies lay off fewer employees, employers are now more focused on recruiting and retaining existing personnel. Moreover, although the United States continues to recover the jobs lost at the beginning of the epidemic, the sharp rebound in demand has exceeded the company's hiring capacity, making the already stretched supply chain even more tense. The tight supply chain has led to a slowdown in production, and even prompted some companies to temporarily lay off their employees, causing the number of people claiming unemployment benefits for the first time each week to become more turbulent.
[The United States says there is currently no strategic oil reserve plan]
According to a report in the Financial Times on Wednesday, the US Secretary of Energy proposed the possibility of releasing strategic oil reserves. In response, the US Department of Energy issued a statement on Thursday: “The Department of Energy continues to monitor global energy market supply and will cooperate with us. Cooperation agencies to determine if and when action is required. To protect the American people, all the tools in the toolbox are considered, but there is no plan to take action at this time." A spokesperson for the US Department of Energy stated that it did not seek a ban on crude oil Export.
Goldman Sachs said that if the United States puts the strategic petroleum reserve (SPR) on the market, it can only bring the risk of a $3 drop in the average Brent crude oil price of $90 at the end of this year that the bank predicts. The United States intends to put oil reserves up to 60 million barrels.
In addition, if the export of U.S. crude oil is banned, "it will greatly disrupt the U.S. oil market and may have a bullish effect on U.S. retail fuel prices based on Brent oil prices."
In an interview with Bloomberg TV, chief oil analyst Amrita Sen said that the Biden administration is increasingly publicly expressing concerns about high energy prices. "The key thing to remember is that the Biden administration is very eager to give consumers cheap gasoline. Citi said that OPEC+'s accelerated production increase is "only a matter of time", especially if the price of oil exceeds US$80 per barrel.
[European natural gas prices hit record, many British energy companies closed down]
The market focus now returns to the shortage of global natural gas supply, which is bound to increase the crude oil demand for power generation this winter. Recently, European natural gas prices have reached a record level, with an increase of 60% in just two days. The price of natural gas in the UK soared to a record high on October 6, local time, the price of natural gas in the UK rose by 37% (to 400 pence/them), setting a record high in the wholesale price of natural gas. Industry insiders pointed out that high demand for natural gas and reduced supply are the reasons for the surge in wholesale prices.
Industry insiders call on the government to help companies and industries keep functioning. The UK's energy-intensive user organization, which represents steel, chemical and fertilizer companies, said that soaring costs have caused steel production to stop “at times of peak demand”. In the past few weeks, the high wholesale price of natural gas has led to the suspension of many British energy companies and the suspension of production in many industries.
[The market waits for non-agricultural fuel prices to rise]
The US September non-agricultural data will be released in the evening of the day. The market expects that the US non-agricultural employment population growth after the September seasonal adjustment is expected to be between 250,000 and 700,000, the unemployment rate is expected to be between 4.8% and 5.3%, and the average hourly wage growth rate is expected to be introduced. Within 4.5%-4.7%.
JPMorgan Chase expects that the number of non-agricultural employment in the United States will increase by 575,000 in September, and the unemployment rate will drop to 5%. The factor driving the forecast higher than the consensus level is the expected rebound in employment in the leisure and hotel industries.
The economists of ING International Group believe that the main event this week is the September non-agricultural employment data in the United States and will finalize the Fed’s scheduled reduction of balance sheet resolution. Raising interest rates will support the U.S. dollar. Technically, the U.S. dollar is about to usher in a major breakthrough, and the strong US non-agricultural report will consolidate this trend.
Negative factors affecting oil prices
[Iranian Foreign Minister said that negotiations on the Iranian nuclear agreement will be resumed in Vienna soon]
According to foreign media reports on October 6, Iranian Foreign Minister Hussein Amir Abdullahyan said during a meeting with Russian Foreign Minister Lavrov in Moscow on Wednesday, local time, that negotiations aimed at resuming the Iranian nuclear agreement would be very difficult. Restart soon in Vienna. The media quoted Amir Abdulahiyan as saying that Tehran has received signals from Washington that it is again interested in implementing the Iran nuclear agreement.
According to a French media report on October 6, Iranian Foreign Minister Amir Abdullahhiyan said on Wednesday that he expected negotiations on the Iranian nuclear agreement to resume in Austria soon. After meeting with Russian Foreign Minister Lavrov, he told reporters: We are currently conducting final consultations on this matter and will resume negotiations in Vienna soon. Lavrov said that the international community is waiting for the United States to re-fulfil its legal obligations in the nuclear agreement and end illegal restrictions on Iran and all its trading partners.
On the whole, the US Department of Energy has not yet released a plan to release its strategic oil reserves, which has allowed oil prices to stop falling and rebound. In addition, the market expects that even if the US continues to increase oil prices, the increase in demand will not cause excessive fluctuations in oil prices. , The upward trend of oil prices may continue; the market is waiting for non-agricultural data in the evening, and it is currently expected to increase non-agricultural employment by 500,000. If the data is better than expected, US Oil is expected to break the 80 mark.
At 8:15 GMT+8, US crude oil is now quoted at US$78.70/barrel.
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