[ad_1]
On Friday (April 24), US crude continued gains from the previous trading day, as the market expects the United States to introduce more stimulus measures, shortly to boost market sentiment. Additionally, tensions between the United States and Iran overlap oil-producing countries to implement production cuts as soon as possible to offset the impact of the epidemic on demand. Furthermore, the previous oil price fell to a negative value, which caused a sharp rebound in the oil price in the short term.
However, analysts said the impact of the epidemic on the global economy continued, and it is expected to continue to clamp down on oil prices until the economy shows obvious signs of recovery. At the same time, excess surplus crude is reducing global storage space, so it is not ruled out that the June U.S. crude oil contract may still fall to a negative value. Investors are reported to have increased their bearish bets on commodity currencies because they believe the rally in oil prices is still a long way off.
However, due to recent downward pressure and volatility in oil prices, many brokers have restricted clients from buying new positions on some crude oil contracts. Diversified investment in crude oil futures. This may stop the rise in oil prices in the short term.
Some oil-producing countries call for early cuts in production to provide some support for oil prices.
On Thursday (April 23), oil prices soared and continued to rebound. Major oil-producing countries previously said they would accelerate the implementation of planned production cuts to alleviate the sudden drop in demand caused by the epidemic.
Crude prices have experienced the most volatile week in history. In May, US crude futures closed at minus $ 37.63 a barrel on Monday, the most severe sale in history. On Tuesday, the global Brent crude oil futures indicator was hit hard, hit a 20-year low and then rebounded.
Since the beginning of this year, both indicators have fallen by more than two thirds. Global fuel demand fell by around 30% in April and, affected by the pandemic, the oil market will be oversupplied in the coming months.
John Kilduff, a partner at Again Capital LLC, a hedge fund, said: “We have seen a real response from the US industry to current ultra-low oil prices, which has created an incipient recovery in the oil market, allowing oil prices to recover slightly, but still difficult excited by the oil price slightly above $ 15 a barrel. “
It refers to the decline in the number of active rigs in the United States since 2016, as well as the drop in U.S. crude oil production by 100,000 barrels per day to 12.2 million barrels per day.
OPEC + agreed this month to cut production by 9.7 million barrels per day, which represents about 10% of global supply, to support oil prices, but oil prices continue to fall.Based on this, some oil-producing countries ask for a reduction in production as soon as possible before the May agreement comes into force.
Kuwait said on Thursday thatBefore the new production reduction agreement went into effect on May 1, it began to cut oil supplies to the international market.
It is not clear if this is enough to offset weak demand. Energy consulting firm Rystad Energy cut its forecast for 2020 oil demand to 89.2 million barrels / day, a 10% decrease from 2019. Last week, the company predicted oil demand would drop to 90.3 million barrels / day in 2020.
According to sources, Russia is evaluating options for production cuts and may even burn its own oil production. From March to the present, the country’s production has not changed much.
Tensions between the United States and Iran also provide some support for oil prices, but the surveillance effect is limited.
Tensions between the United States and Iran have recently heated up, along with falling oil prices, which is a major factor in the recent sharp spike in oil prices.
Trump said on Wednesday that if the Iranian gunboat is too close to the United States Navy ship, the US military will “sink” the Iranian gunboat. Previously, eleven ships of the Iranian elite combat force were dangerously close to American ships in the Persian Gulf. It is reported that before Trump made this statement, Iran had just successfully launched its first military satellite.
The head of the Iranian Revolutionary Guard also said that if Iran’s security in the Gulf region is threatened, it will destroy American warships.
Although the cross section between the United States and Iran has caused the rebound in oil prices, Vandana Hari, founder of Vanda Insights for the analysis of the world energy market, said that she did not even call this a rebound. I think oil prices are taking a breather. It did not raise oil prices too high. The impact of geopolitical tensions on the market is very small.
In early January, because the United States assassinated a high-ranking Iranian general, Iran then counterattacked and once pushed U.S. crude to $ 65.65. But as market concerns subsided, oil prices began to drop.
Hari noted that the global blockade remains a key factor affecting oil prices, because the current epidemic continues to cause losses, which will continue to weaken demand and hurt oil prices. The downward pressure on oil prices remains enormous, and market sentiment has changed dramatically, especially this week, due to the continued blockade, demand sentiment has become more negative. Countries that find the epidemic curve flattens are very cautious. Infection rates have recovered in many countries. Essentially, what we see is a world that doesn’t know how to get out of this pandemic and related blockades.
The market expects the United States to take more stimulus measures to support oil prices
Another factor that supports oil prices in a short period of time is that the market expects the United States to introduce more stimulus plans.
April 23 local time,The United States House of Representatives (388 votes in favor, 5 votes against) overwhelmingly approved the $ 484 billion stimulus plan for small businesses, hospitals and tests, to be sent to the President of the United States, Trump, for your signiture.The goal of the plan is to support small businesses and hospitals affected by the epidemic crisis and expand the scope of virus detection to prepare for the restart of the economy.
This is the fourth time that the United States has spent epidemic-related expenses since the beginning of March, totaling nearly $ 3 trillion. The large number of stimulus measures can boost market optimism in a short time, increasing oil prices.
However, analysts pointed out that if the epidemic hits the global economy more than expected by the market, especially after continued stimulus measures, the financial budgets of several countries have reached a difficult point. Trend
United States Secretary of the Treasury Mnuchin considers a government loan plan for troubled oil companies
US Treasury Secretary Nuchin is reported to have said he is considering a government loan plan for US oil companies seeking federal assistance to deal with falling oil prices. “Providing a loan tool for the industry is one of the initiatives we are considering. We are considering many different options, but we have not yet come to any conclusions,” Mnuchin said in an interview.
The US Secretary of Energy. The US, Dan Brouillette, said last week that he was in talks with Mnuchin to almost double the ceiling on loans to medium-sized US energy companies. USA At US $ 2-250 million. These loans are part of the CARES Act stimulus package recently approved by the United States.
The collapse of oil prices has led oil shale companies to cut costs and suspend drilling activities.
United States President Trump said Tuesday that he asked the cabinet to develop a plan to inject capital into the troubled U.S. oil drilling industry.
Major brokers have restricted new positions on some crude oil contracts, and recent volatility in oil prices may have decreased slightly
After crude oil futures fell below minus $ 40 on Monday due to record sales, many brokers, including major US discount broker TD Ameritrade Corp, restricted clients from buying new positions on some trading contracts. Raw oil.
TD Ameritrade told clients that it will only allow U.S. crude oil futures contracts in June and July and all U.S. crude oil options contracts to be closed.
“We made this decision based on the volatility and liquidity of the crude oil market in the last week. This allows these markets to continue returning to the previous level of liquidity and volatility,” said JB Mackenzie, Managing Director of TD Ameritrade Futures and Foreign Exchange Business. .
Two other brokerage houses, London’s Marex Spectron and International Asset Holdings (INTL FCStone), said that after Monday’s high-volatility trade caused heavy losses to contract holders, they were restricting new positions.
Some retail investors suffered large losses. Another American broker, Interactive Brokers (IBKR.O), said Tuesday that it needs to account for the loss of $ 88 million to cope with the impact of the forced clearance of accounts.
Some market participants criticized the CME Group (CME.O) for allowing contracts to be traded in negative areas. CME Group declined to comment Thursday.
According to one speaker, Marex prevented many clients from establishing new positions in June for US crude and Brent crude contracts, and increased margin requirements. A spokesperson confirmed that international asset holdings also impose restrictions.
“Given the extreme and unpredictable shocks in the market, we have taken steps to protect our smallest clients and ensure that they are aware of the risks they are taking,” an International Asset Holdings spokesperson said in a statement.
On the other hand, the United States Oil Fund LP (USO), the largest crude listed and traded fund (ETF) in the United States that triggered a fierce reaction from global crude ETFs, said in a regulatory filing on Wednesday that the fund began to diversify in response to extreme market volatility. Investment in crude oil futures.
USO said it can allocate 20% of its portfolio to June crude oil futures on the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE), 50% to July crude oil futures and 20% and 10% , respectively. For August futures and September futures. The fund previously invested primarily in contracts in recent months.
The fund said in a regulatory document that it is adjusting its investment portfolio to cope with “abnormal market conditions.” This move is the latest move by the USO to ease the impact of the unprecedented collapse in oil prices. By diversifying into a broader range of crude oil contracts, the fund can ease pressure on its share price. The prices of the crude oil contracts of the distant month are higher than those of the last months.
“The purpose of this design is to curb downside exposure and volatility,” said Greg Trinks, head of fund investment solutions business at UBS Wealth Management in the United States.
Investors are raising bearish bets on commodity currencies, arguing that the rally in oil prices is still a long way off.
Although US crude oil futures have rebounded in the past few days after the first negative value earlier this week, many investors believe that the global demand slowdown caused by the epidemic may continue for many months, putting pressure on prices. of oil and weakened The currency of the commodity-producing country.
“The collapse in oil prices only confirms my opinion that the world economic situation is very bad,” said Momtchil Pojarliev, head of foreign exchange in New York at Paris Asset Management in New York. “I don’t think we can get rid of this situation anytime soon.”
In recent months, the decline in the commitment to commodity currencies has generated benefits for fund managers, as the new coronavirus epidemic has reduced the demand for assets ranging from crude oil to industrial metals.
The Brazilian real is one of the most frustrated currencies, with a drop of 36% so far this year; the Mexican peso has dropped 30%. The Australian dollar, the New Zealand dollar and the Canadian dollar fell between 9% and 10%.
The negative price of oil recorded earlier this week can be repeated in the June WTI contract
Kiernan, chief energy analyst at The Economist Intelligence Unit, said that under possible circumstances the negative oil prices seen earlier this week may be repeated in the June WTI contract, due to ongoing oil storage problems tormenting the market, at least in the short term; Brent crude oil may not be as badly affected by storage problems as shipping. The price of Brent crude is set on an island in the North Sea about 500 meters from the sea, where oil tankers can store the crude. In contrast, WTI crude oil is located inland, 500 miles from the water, making it difficult for the world market to receive crude oil.
According to data from the oil analysis agency Vortexa, the amount of major refined oil stored in offshore oil storage facilities worldwide has more than doubled to approximately 68 million barrels in the past month.
The continuing demand crisis caused by downward pressure on the world economy remains the main negative factor
The market is still evaluating the impact of the epidemic on the global economy. Overall, the outlook for crude oil demand remains the dominant factor affecting oil prices.
As of mid-March, 26.5 million Americans have applied for unemployment benefits. This surprising number confirms that all the jobs added during the longest-running job boom in United States history have affected the economy due to the epidemic AND disappeared.
According to the US Department of Labor. In the US, the number of jobless claims at the beginning of the week after April 18, after seasonal adjustment, totaled 4.427 million. The previous week was 5,237 million. Analysts polled by Reuters had previously estimated that 4.2 million people were claiming unemployment benefits early last week.
Additionally, new home sales fell most in more than six and a half years in March. Data company IHS Markit said in a separate report released Thursday that the initial value of the composite US production index that tracks manufacturing and services fell to 27.4 this month, the lowest level since late 2009 when it was compiled. the index. 40.9.
In Europe, Germany’s manufacturing PMI fell to a more than 11-year low in April, and the overall PMI hit a record low. In this regard, the economist Markit Smith said that the April PMI data fully exposed the impact of the epidemic on the German economy, and that the activities of the manufacturing and service industries decreased at an unprecedented rate.
Days to Track Initial Value of US Durable Goods Orders USA And the University of Michigan Consumer Confidence Index. If more data shows that the downward pressure on the global economy is increasing, there is little room for oil prices to continue to pick up.
(The copyright of the content belongs to Huijin.com, indicate the source and the link to this article when you reprint this article)
Keywords:
