During the Asian session on Wednesday (October 13), U.S. crude oil hovered at $80.08 per barrel; oil prices fluctuated on Tuesday and stayed at a high level in the past seven years. Traders weighed the impact of rising energy prices on the global economic recovery.
During the day, focus on China's September trade account, the United States' September CPI annual rate has not been adjusted seasonally, OPEC's monthly crude oil market report, Thursday's 00:00 EIA monthly short-term energy outlook report, API crude oil inventory data and EIA data originally scheduled to be released on Wednesday , Due to the strengthening of Columbus Day on Monday, API crude oil inventory data will be released at 4:30 on Thursday and EIA inventory data will be released at 23:00 on Thursday.
Bullish factors affecting oil prices
[Energy shortage is expected to boost winter demand]
Driven by energy shortages in Asia, Europe and the United States, electricity prices have risen to record highs in recent weeks. The shortage of natural gas and coal in the winter in the northern hemisphere has prompted some people in the power industry to switch to fuels such as diesel and fuel oil. The surge in natural gas prices has also prompted power plants to switch fuels from cleaner natural gas to oil.
Analysts estimate that the shift from natural gas to oil-based power generation may increase crude oil demand by 250,000 to 750,000 barrels per day.
Rising energy prices have also increased inflationary pressures in the recovery process of the economy. Data on Tuesday showed that Japan’s September wholesale prices soared 6.3% year-on-year, the largest year-on-year increase since September 2008.
Qatar, the world’s largest producer of liquefied natural gas (LNG), told customers on Monday that it cannot help reduce energy prices and supply more fuel to the market; OANDA’s senior market analyst Craig Erlam said that there is still a lot of momentum behind the oil rally, and the fundamentals Still extremely favorable, will it be a surprise to see crude oil prices return to triple digits later this year? Probably not. "
Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said that when the price of natural gas in Europe reaches the equivalent of $250 per barrel of crude oil, it is difficult for us to predict what will happen.
[British fuel crisis continues, 10% of gas stations in southeast England are still exhausted]
British media reported that due to the soaring gasoline prices and the small number of truck drivers, the UK has been facing considerable fuel shortages since last month.
According to the "Daily Telegraph" on the 12th, the British Gasoline Retailers Association stated that at least 10% of gas stations in London and southeast England are still exhausted. Brian Madderson, the chairman of the industry association, said the situation in London and the southeast remains severe; most retailers are still worried that they do not know when they will receive the fuel. British media reported that there were long lines at some gas stations in the UK, and many drivers made panic purchases when prices rose. At the same time, fuel inventories fell sharply, and BP even had to close some of its factories across the country due to a lack of gasoline and diesel.
Last week, European natural gas futures prices set a new record, exceeding US$1,900 (approximately RMB 12,252) per 1,000 cubic meters, and then fell by US$740 (approximately RMB 4,772). At present, European natural gas prices have temporarily stabilized at around US$1,198 (approximately RMB 7726).
[India triggers the risk of "power outage" or increases demand]
The fuel shortage problem in India has intensified in recent days, which has aroused widespread concern in India and abroad. Electricity produced by coal accounts for more than 70% of India's electricity supply. Therefore, the shortage of coal directly affects India's electricity supply, and even makes India's electricity prices soar.
According to the Press Trust of India (PTI), data from the Central Power Grid also shows that as of October 7, India has 16 coal-fired power plants with inventory available for power supply for "0 days" and 30 coal-fired power plants with inventory available for power supply. The time is "1 day", and there are 19 coal-fired power plants that have inventory available power supply time for "3 days", 9 for "4 days", 6 for "5 days", and 10 for "6 days". "India Today" stated that the above figures mean that India is on the verge of a national power crisis.
[U.S. job vacancies in August declined for the first time this year]
Job vacancies in the United States fell for the first time this year in August, but they are still close to the highest level in history. With the increase in new crown cases, the demand for labor has fluctuated slightly.
The Job Vacancies and Labor Turnover Survey (JOLTS) released by the US Department of Labor on Tuesday showed that the number of job vacancies fell to 10.4 million in August and was revised to 11.1 million in July. Economists surveyed by Bloomberg expected a median value of 11 million.
At the same time, the number of voluntary departures has increased, highlighting salary growth, signing incentives and a large number of job vacancies are driving many people to switch jobs. Turnover rate rose to a record 2.9%
Although job vacancies have fallen, the overall situation is still at a high level that does not match the supply and demand of the labor market. From manufacturers to restaurants, companies of all kinds are in urgent need of labor. However, despite ongoing pandemic concerns, school openings, and increased savings levels, the labor participation rate remains sluggish. The easing of these factors in the next few months should provide support for recruitment, but the exact timing is unclear.
Negative factors affecting oil prices
[The S&P 500 Index fell for three consecutive times, and US inflation expectations hit a record high]
The U.S. stock market fell, and the S&P 500 index fell for the third consecutive day as investors waited for the upcoming earnings season. The New York Fed's survey report shows that consumer inflation expectations have reached a record high.
Apple is reported to have lowered its 2021 iPhone 13 production target to as much as 10 million units due to chip shortages. Traders have been worried that the chaos in the supply chain will hurt corporate profits. Atlanta Fed President Raphael Bostic said that the inflation spike has lasted longer than officials expected, and it is not appropriate to call such increases "temporary."
Federal Reserve Vice Chairman Richard Clarida said that the reduction conditions have been "almost met", and a key test of market confidence will be the earnings release season starting on Wednesday. The quarterly forecast shows a deteriorating trend. According to Bloomberg industry research data, analysts expect the profits of S&P 500 companies to increase by 28% to earnings per share of $49, which is lower than the staggering 94% in the previous quarter. This will mark a deceleration in profit growth. In the beginning, this historically heralded weak returns in the stock market.
[International Monetary Fund downgrades global economic growth forecast]
The International Monetary Fund (IMF) still expects the global economy to rebound strongly after experiencing the recession during the COVID-19 pandemic, but the organization has expressed concern that the recovery will lose momentum and become increasingly divided.
The Washington-based IMF released the latest "World Economic Outlook" on Tuesday, stating that it now expects the world economy to grow by 5.9% this year, which is 0.1 percentage point lower than the July forecast, and it will shrink by 3.1% in 2020. The organization also maintained its 2022 forecast at 4.9%.
The IMF warned that threats to economic growth have increased, including mutant delta strains, tight supply chains, accelerating inflation, and rising food and fuel prices. The overall data also concealed substantial downward adjustments in some countries' forecasts, especially low-income countries where vaccine resources are still limited.
Gita Gopinath, head of economic research at the IMF, stated in the introduction to the report that overall, risks to the economic outlook have increased, policy choices have become more complex, and dangerous divergences between countries’ economic outlooks remain a major issue. "
Among the world's largest economies, the IMF lowered its 2021 US economic forecast by one percentage point to 6%, mainly due to supply constraints, but raised its 2022 forecast from 4.9% to 5.2%.
Overall, the national monetary and economic organization’s downward adjustment of global economic expectations highlights the slowdown in economic recovery and restricts the increase in oil prices. However, in the global energy crisis, especially under the influence of the spread of power risks in various countries, the demand for crude oil may further increase, and the momentum for rising oil prices remains unreliable. Decrease, oil prices will pay attention to OPEC monthly reports and EIA monthly reports. If the monthly reports show that inventories decrease and demand increases, oil prices will continue to rise.
At 8:26 GMT+8, US crude oil is now quoted at US$80.46 per barrel.
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