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The Chinese industry is suddenly shrinking in September and Nasdaq declines for the fourth session in a row :We are closing in on the September trading process, which has seen a lot of confusion, especially because of the Evergrande crisis that has affected stock markets over the past and current week.
On the commodity market, after oil had recorded its highest levels in almost three years,
it fell again after the announcement by the Energy Information Administration of a significant and unexpected increase in oil inventories.
Evest follows all details in the following report:
topics:
Oil continues to fall due to increased inventories
A loss in Japan and gains in China
The Chinese industry is suddenly shrinking in September
The Chinese Caixin improved slightly in September
Japanese industry was significantly weaker in August
Nasdaq completes the fourth day in a losing streak
Adjusted UK GDP growth upwards for the second quarter
Oil began to show new signs of declining, as it continued to fall for the second session in a row following the announcement of a significant increase in US inventories.
The cost of Brent crude futures for November on the London Stock Exchange ICE Futures is $78.25 per barrel,
$0.5٪ lower than the closing price of the previous session.
The price of WTI crude futures for November in electronic trading on the New York Mercantile Exchange (NMX) was $74.75 per barrel,
0.11% below the level when the market closed on September 29.
According to the Department of Energy, US commercial oil reserves increased last week by 4.58 million barrels to 418.54 million barrels.
The American Petroleum Institute (API) estimated that there is a lower rise of 4.1 million barrels.
Experts interviewed by Bloomberg expected inventories to decline by 2.15 million barrels.
Meanwhile, reserves at Cushing Station, where traded oil is stored on the NYMEX stock exchange,
increased by 200 thousand barrels, while API recorded a jump in reserves by 359 thousand barrels.
Last week’s growth in United States gasoline inventories amounted to 193 thousand barrels,
while experts expected an increase of 1.5 million barrels.
Distillate inventories rose by 384 thousand barrels (a decrease of 1.4 million barrels was expected).
The oil market is being pressured by the marked strengthening of the dollar,
with the ICE dollar index jumping to its highest level in about a year on Wednesday and losing about 0.1% on Thursday.
Stock indices in the Asia-Pacific region show multi-directional dynamics on Thursday: The Nikkei 225 index declined, and the Chinese CSI 300 index rose.
While the US S&P 500 index’s futures are rising by 0.52%. 0.43%.
China had a key role, with the worrying state of the domestic economy,
owing to energy problems and high raw material costs affecting industrial production.
In the meantime, the path of the global economy is worrying as it is affected by the pandemic, causing investors to be cautious.
With regard to the overall situation in Asia, industrial production fell by 3.2% in August, while retail sales declined for the first time in six months,
unlike the manufacturing sector, which improved in September.
In Japan, a few hours after Fumio Kishida was elected as the leader of the ruling Liberal Democratic Party (LDP) and thus prime minister
, the Nikkei index showed marginal losses of 0.31% at 2,9452.66 points.
Hong Kong’s Hang Seng index fell by 0.43% to 24,560 points, unlike the Shanghai Composite and Shenzhen Component indices,
which recorded a 1.81% gain at 14333.84 points.
The Kospi index rose by 0.28% to 3068.82 points, and the S & P/ASX 200 index in Australia rose by 1.88% to 29452.66 points.
According to official figures, the gloomy mood suddenly took over the Chinese industry in September.
The PMI in the manufacturing sector fell to 49.6 (August: 50.1),
according to data from the National Statistics Agency and the China Federation of Logistics and Purchasing (CFLP).
This is the first time since February 2020 that the index fell below the important 50 mark.
The Wall Street Journal consulted economists’ expectations at 50.1 points.
In the Chinese industry, activity recovered in September.
The Purchasing Manager’s Index (PMI) in the manufacturing sector set by Caixin Media Co and Research House Markit rose to 50.0 (August: 49.2) points.
The index is based on a survey of about 400 companies, with greater attention to small, privately-owned companies.
The Japanese industry suffered a major setback last month.
According to the Government, production fell by 3.2 percent compared to the previous month and is therefore much higher than expected.
Unanimously, economists predicted a rate of -0.5 percent.
The main reason for the significant decline is the shortage of chips in the automotive industry.
US stock indices ended Wednesday without a single dynamic, with the Nasdaq Composite falling for the fourth straight day, while the Dow Jones Industrial Index and Standard & Poor’s 500 rose.
The Chairman of the Federal Reserve Board, Jerome Powell,
said that the growing growth in consumer prices in the United States was associated with the recovery of economic activity after the Covid- 19 pandemic,
and did not mean that such an inflationary system would continue in the future
. He also reiterated that the Fed would raise the benchmark interest rate if “the significant increase in inflation causes serious concerns”.
Investors remain concerned about the rising debt limit.
Republicans in the Senate stopped another attempt by Democrats to raise the national debt limit,
leaving them with the need to develop a new initiative to avoid default.
In the meantime, Janet Yellen, the US Treasury chief, warned earlier that her department could run out funds by October 18,
if Congress did not raise the borrowing cap.
The British economy grew in the second quarter of 2021 faster than initially expected.
GDP increased by 5.5 (temporarily: 4.8 percent compared to the previous quarter,
as announced by the Statistics Agency in a second publication.
The economists who surveyed the Dow Jones Newswires had predicted a confirmation of the initial figure.
Hints of ending QE program hitting Wall Street and rising inventories pressure on oil :It’s not usual for September to be the strongest for the US stock market.
The statistics published and the situation with the public debt “ceiling” do not contribute to an increased level of investment optimism.
The Converse Broad consumer confidence index fell for the third month in a row in September.
Gas prices set records, but these prices will contribute even more to rising inflationary pressures.
In September, the number of recipients of $2000 in checks in the US fell dramatically, but some of that money stemmed from the growth of the US stock market.
Evest follows all this and more in the following report:
topics:
Record declines on Wall Street
Oil inventories are rising sharply
Chinese authorities are interfering with the Evergrande crisis
The resounding remarks of FRS representatives had the effect of causing tension in the markets.
The chairman of the Federal Reserve Bank of St. Louis said the Fed must act more effectively to tackle inflation.
He did not rule out the possibility of two base rate increases in 2022.
The Chairman of the United States Federal Reserve, Powell, announced the Fed’s willingness to end its quantitative easing program.
A tighter monetary policy would hurt tech stocks the most.
The United States Department of the Treasury will be able to meet its financial obligations without raising the US national debt limit until around October 18,
and therefore, this situation will gradually escalate.
US Treasury Secretary Janet Yellen said that if the debt limit was not resolved, America would default for the first time in history.
The full confidence and creditworthiness of the United States will fade, and the country is likely to face a financial crisis and economic recession.
However, according to experts, Republicans do not want to cooperate,
and this will have a negative impact on the situation in the stock markets in the coming days.
The Chairman of the Federal Reserve Board of the Banking Committee reiterated his willingness to close the stimulus program soon,
contributing to the dollar rising to its highest level since November 2020. The strong dollar was a reason to fix profits, for the commodity speculators.
US stock indices declined 1.6-2.8% on Tuesday, the Nasdaq fell by -2.8%, the highest since March 18,
and the Dow Jones (-1.6%) fell for the first time in five trading sessions.
Maximizing the yield on government bonds since June negatively affects the stock market (the yield on the 10-year terrestrial reservoirs exceeded 1.5% annually),
as well as the growth in the cost of energy resources.
US Treasury Secretary Janet Yellen said her department’s funds could run out by October 18 if Congress does not increase the borrowing limit.
Federal Reserve Chairman Jerome Powell said the regulator met almost all the criteria for starting a rollback of stimulus procedures.
He said that inflation in the United States is likely to continue rising in the coming months, but then slow down.
The Chairman of the Federal Reserve Board said that rising inflation,
caused by problems in supply chains and other factors associated with the recovery of economic activity
after the Coronavirus pandemic, turned out to be longer and more important than expected.
Oil prices continue to decline on Wednesday morning amid renewed concerns about the pace of global economic recovery under the Coronavirus pandemic after oil inventories increased.
On the eve of Brent crude price, its price rose to $80.75 per barrel – the highest level in 3 years.
The statistics of the American Petroleum Institute added a slightly negative sentiment,
showing an increase in crude oil inventories by 4.1 million barrels, and gasoline – by 3.6 million barrels,
and distillates products – by 2.5 million barrels.
If statistics from the United States Department of Energy were released on Wednesday, another reason for the decline in oil would appear.
Also negative for raw materials is the reduction of the Chinese economy’s outlook for this year from leading banks because of risks in the real estate sector and the energy crisis.
As oil is in the peak purchasing zone, the deadlock may continue to decline, although the $75 per barrel support for Brent crude remains appropriate.
Chinese authorities intervened to help Evergrande and bought 20% of its stocks in Chengjiang Regional Bank for 10 billion yuan ($1.55 billion). However, t
he troubled developer’s creditors are not likely to receive these funds.
One of China’s biggest real estate developers, China Evergrande, which faced debt problems and low liquidity,
announced that it would sell Chengjiang Bank stocks to the State Administration Corporation for $1.5 billion.
The company’s stocks ratio is 11.6%.
The negative dynamics of stock indexes also prevail in Asia on Wednesday, with Japan’s Nikkei index fell by 2.1%,
China’s Shanghai composite by 1.7%, and Hong Kong’s Hang Seng index rose by 0.6%.
Investors in the region are worried about a slowdown in the expected growth rate of the Chinese economy,
which is facing an energy crisis. Goldman Sachs economists expect China’s GDP to rise by 7.8% in 2021, down from 8.2% in previous projections.
Earlier, Nomura Bank and rating agency Fitch also cut their expectations for an increase in the Chinese economy.
The country’s energy supply crisis is associated with the fact that some regions of China are facing a real electricity shortage amid a sharp jump in the price of coal and natural gas,
while others are demanding that companies provide electricity in order for the government to achieve emissions reductions.
As a result, Chinese producers warned that strict requirements to reduce electricity use would lead to a decline in production in the country’s major economic centers.
On Wednesday, the People’s Bank of China (PBOC) the provided country’s banks with Part IX of the cash for 100 billion yuan
in reverse buyback to ensure adequate liquidity in the banking system.
The Central Bank of China said in a statement that the 14-day interest rate on transactions was 2.35% per year.
Investors are also watching the election of a new prime minister in Japan,
which will be held in the ruling Liberal Democratic Party on Wednesday.
Yesterday, the Associated Press reported that Japan would abolish the emergency regime introduced in connection with the Covid-19 pandemic as of October 1, and gradually lift the restrictions.
Inventories suddenly rise by 4 million barrels: On Tuesday 28th September 2021 the American Petroleum Institute (API) declared a sudden rise in crude oil stockpiles by 4.127 million barrels for the week to September 24, contradicting analysts’ expectations for a decline of 2.333 million barrels for the week.
In the last week, the API declared a decline in stockpiles by 6.108 million barrels to exceed the 2.400 million barrels expected by analysts.
The data by the API shows that gasoline stockpiles also rose by 3.555 million barrels by the week ending September 24th compared with last week’s decline by 432.000 barrels.
Distillate stockpiles rose as well this week by more than 2.483 million barrels compared with last week drop by 2.720 million barrels.
Cushing reserves continued to accumulate by adding 0.359 million barrels to its stockpiles this week,
while it dropped in the last week by 1.748 million barrels.
Topics:
Iran and Venezuela make oil swap deal
Sudan makes a deal with protests to export oil
Oil prices fell on Tuesday before data publishing,
while the weekly reports indicate US inventories declining and market’s aspiration to a precise market in the future;
especially after Europe’s gas crisis which is expected to extend to other countries.
West Texas Intermediate crude fell 0.70% on Tuesday afternoon before data publishing.
At midday West Texas Intermediate was for 74.92$ a barrel, gaining 4.50$ throughout the week, but 0.53$ below Tuesday’s prices.
Brent crude fell 1.01% to 78.73$ a barrel.
US oil inventories cleaned out approximately 73 million barrels this year,
according to the API data (below pre-pandemic levels)
The latest data by Energy Information Administration EIA shows that US inventories are declining by 8% below the average of the five years for the same time of the year to 414 million barrels.
In the last two weeks, US oil production lowered by more than a million barrels,
but crude oil production rose 10.6 million barrels per day for the week to September 17th,
finally, more than 84% of oil producers resumed operations in the Gulf of Mexico after Ida’s arrival to shore by the end of August.
Iran and Venezuela struck a deal to exchange heavy Venezuelan oil for Iranian condensate, Reuters reported.
According to the resources, oil exchanges begin this week and last for six months, to be extended when needed.
The Iranian crude oil imports will help Venezuela to revive its declining oil exports amid the American sanctions,
that prevented Venezuela from obtaining the light oil to be mixed with Venezuelan heavy oil to be exported.
According to Reuters’s resources, the deal will provide Iran with heavy crude that could be sold in Asia,
Venezuelan light oil could go to Asian buyers too.
Reuters mentioned that according to the United States department of treasury the deal violates the American sanctions against Iran and Venezuela.
The department of treasury in response to Reuters’s demand to comment replied that any dealings with the national Iranian oil company from non – American persons are subject to secondary sanctions,
it also added that it keeps its right to sanction anyone insisting on working in the oil sector of the Venezuelan economy.
Under such pressures, Venezuela managed to boost its exports and get vital revenues.
Venezuela, as the world’s biggest oil reserve, exported more than 700.000 barrels per day in July (the highest exporting rate since February),
according to a recent report by Reuters.
Most of it has gone to China and Malaysia, yet Malaysia is usually a station on the Venezuelan oil road to China.
The same report indicated that three of five oil blending installations in the Orinoco belt are working,
and another oil development is getting ready to resume operations after being suspended for a year.
Iran has revealed recently its plans to get 145 billion dollars from oil and gas investments domestically and internationally.
Sudan’s government made a deal with protests to lift the Red sea surrounding, including the South Sudan oil-exporting center.
Reuters said that the domestic tribes are protesting bad economic conditions in the East of Sudan,
blocking roads and ports including a port shipping crude oil from South Sudan to international markets.
The deal between the government and rebels prevented an imminent crisis.
The oil minister warned that the oil-exporting station reserving capacity is about to end in only ten days,
and as a consequence oil production fields should stop production.
The non-coastal South of Sudan is the home for most of the old United Sudan oil reserves.
Despite most of these reserves not being utilized,
the country is producing more than 100.000 barrels per day to reach its highest level by 185.000 barrels per day at a previous time this year,
before its first licensing session ever.
At the present time, South of Sudan owns five producing blocks,
run by the Chinese national oil corporation, oil and gas Indian company, and Malaysian PETRONAS.
The oil ministry mentioned at a previous time,
that an oil licensing session aiming at attracting a diverse group of foreign investors
to an area is already including giant Chinese and Malaysian oil companies.
South Sudan separated from Sudan in 2011 to take with it 350.000 barrels of daily production,
recently after the civil war in South Sudan broke out in 2013, to hinder oil production.
In 2018 the warring factions in South Sudan signed the Khartoum agreement declaration,
and conflict parties declared a permanent ceasefire.
Both the Sudan and South Sudan governments searched for the possibilities of reconstructing the oil sector in South Sudan according to the South Sudan oil minister,
about 90% of its oil wealth is still undiscovered.
Pressure on the stock markets because of the Evergrande crisis and perfect performance for oil and gold: Despite additional information of concern from Evergrande divisions about the poor financial situation,
the impact on public market morale has been tempered by massive liquidity from Chinese authorities,
with high expectations that the company’s business restructuring would be orderly.
Markets are also waiting for positive news from the US Congress,
where they discuss the budget and raise the national debt until the end of September when the US ends the fiscal year.
Evest follows developments in the trading markets in the following report:
Topics:
Evergrande supports the commodity market and puts pressure on the stock markets
Gold rises because of the Evergrand crisis
Oil rises for the fifth consecutive session
The cryptocurrency market is quickly offsetting its losses
Investors continue to monitor developments around the Chinese Evergrande’s debt problems,
the potential for the company to default, as well as the spread of Chinese corporate debt problems in the global economy, adding uncertainty to markets.
The People’s Bank of China provided banks with another portion of the funds – 100 billion yuan ($15.5 billion) on Monday, as part of reverse buybacks to ensure adequate liquidity in the banking system.
The Central Bank of China said in a statement that the 14-day interest rate on transactions was 2.35% per year. Over the past week,
China’s central bank has injected 320 billion yuan into the country’s financial system.
Chinese electric car manufacturer New Energy Vehicle Group Ltd, also known as Evergrande Auto, s
aid it had canceled plans to list in Shanghai amid financial problems at its parent company, the developer China Evergrande.
The press release said that the process of issuing class A stocks “will not continue any further.”
without mentioning the reason for this decision.
A year ago, New Energy Vehicle announced that it planned to include shares in the Shanghai Science and Technology Innovation Council, known as STAR.
The company plans to issue up to 1.56 billion stocks.
At the end of last week, New Energy Vehicle reported that it faced a “severe funding gap” and may not meet its financial obligations.
The company talked about negotiations with new investors about potential financing and discussions about selling a number of assets in China and abroad.
Evergrand is about to default after years of massive growth and heavy borrowing.
The decline in sales, as well as actions taken by Beijing to curb the recovery of the Chinese housing market, contributed to the fact that the company found itself in a crisis situation.
At the end of June, the company debt accounted for $304 billion.
Gold prices rose on Monday as concerns continued over the fate and wider impact of the heavily indebted real estate company China Evergrand,
boosting the attractiveness of precious metal as a safe haven.
Spot gold rose 0.5 percent to $ 1757.79 per ounce by 01:27 GMT, while US gold futures rose 0.3 percent to $ 1757.30.
The pressure on the stock market last week was due to the situation with Chinese developer Evergrande.
On Thursday, the company was supposed to pay interest on dollar bonds, however, it did not, as reported by the Wall Street Journal.
In Asia, stock index dynamics were also mixed on Monday, with Japan’s Nikkei 225 declined by 0.03%, China’s Shanghai composite 0.9% and Hong Kong’s Hang Seng rose by 0.1%.
Investors are under pressure with the spread of the Covid-19 virus.
While some countries around the world are gradually lifting the restrictions imposed by the coronavirus pandemic and returning to normal life,
there are still concerns in Asia about potential due to relatively slow vaccination rates.
On the oil market, prices rose for the fifth consecutive session this Monday morning,
backed by continued supply concerns as demand increased in several regions of the world amid the easing of restrictions on the coronavirus epidemic.
The price of Brent crude on Monday was $1.3 higher than the level recorded at the close of the main trading on Friday.
Brent crude futures’ cost for November was $79.11 per barrel (+ 1.3٪ and + 1.1٪ on Friday),
and the price of West Texas Intermediate crude for November was $74.95 per barrel (+ 1.3٪ and + 0.9٪ on Friday).
Over the past 12 months, prices have gained more than 80%.
Bloomberg writes that the additional driver for rising oil prices is the shortage of natural gas supplies, particularly in Europe,
which could affect the entire energy complex in winter. Goldman Sachs expects oil prices to rise to $90 per barrel.
The cryptocurrency market made a rapid comeback from last week’s turmoil over China’s latest crackdown,
with currencies such as bitcoin and Ethereum offsetting most of their losses on Monday.
Bitcoin rose to about US $44000 close to the high when the People’s Bank of China announced its latest step in curbing the cryptocurrency on Friday.
Ethereum broke above last week’s level of $3 100.
Cryptocurrency markets were troubled on Friday when the People’s Bank of China (PBOC) issued a new restrictive ban on transactions and mining,
in cooperation with several other state agencies.
This move suggests that China’s policies may move towards a more serious and coordinated level.
Meanwhile, previous data from Beijing did not fully rule on bans on cryptocurrencies in the country,
so some traders were more optimistic about the impact.
Evergrand’s problems are still disturbing the markets and positive week for oil and US indices: The situation in global markets has stabilized, in particular, US stock indices
. Having opened on Friday at a moderately low level, it later managed to post slight gains. In turn, after a domestic correction in the first half of Friday, oil prices also turned higher.
Evest follows all developments in the trading markets in the following report:
topics:
Oil is rising to record levels
Banks expect oil prices to rise
Evergrand’s problems don’t end
US monetary policy supports the dollar against the euro
Mixed dynamics in Asia and negative dynamics in Europe
Oil prices boosted their growth in Friday’s trading.
The cost of Brent oil futures for November on the London Stock Exchange ICE Futures is $78.1 per barrel, $0.85 (1.1%) higher than the closing price on Thursday.
The price of Brent has not risen above $78 per barrel since October 2018.
West Texas Intermediate crude oil futures for November were traded in electronic trading for the New York Mercantile Exchange (NEMX) at a 10-week limit of $74.14 per barrel,
$0.84 (1.15%) higher than their value.
The market was supported this week, in particular, by data on last week’s decline in US oil inventories to its lowest level since 2018.
“In the short term, inventory levels in the United States and the world will support oil prices as they continue to fall rapidly,”
said Robbie Fraser, an analyst at Schneider Electric.
The number of oil platforms operating in the United States rose by 10 units last week, to 421platforms,
according to data from US oil field service company Baker Hughes released on Friday.
Currently, the operating facilities are 238 more than the previous year.
Bloomberg wrote that a shortage of natural gas supplies in Europe could affect the entire energy complex in winter.
Goldman Sachs expects oil prices to rise to $90 per barrel.
In the meantime, Bank of America experts predict that oil production in the United States next year will increase by 800 thousand barrels per day.
In this case, the US will become the fastest-growing non-OPEC + oil producer, according to the Financial Times.
Bank of America said that the growth of production in the United States would affect the balance of supply and demand in the world market,
thereby alleviating experts’ concerns about potential supply shortages. But bank experts believe that even in the event of a rapid increase in US companies’ production,
this will not disrupt oil’s rally.
In the middle of Friday, global investors were pressured by the debt problems of one of China’s biggest developers,
Evergrand Group.
Hengda Real Estate’s main department paid interest on its domestic bonds on Thursday.
However, Western media reported that foreign Evergrande bondholders had not yet received their payments, totaling $83.5 million.
The developer can make payments later: The company has a grace period of 30 days default.
The main concern of the tradesmen is that if the company is still unable to make interest payments,
the foreign holders of Evergrand bonds will suffer losses.
This will raise questions about their financial viability and may lead them to start selling their other assets to raise funds.
The US dollar has greater advantages over the single European currency through the differences in monetary policy approaches of the Federal Reserve and the European Central Bank,
which will contribute to its strengthening in the medium term.
The Fed is already preparing to end its quantitative easing program with the possibility of an increase in the key rate in 2022,
while the ECB may maintain a “super-soft” approach to monetary policy for a long time and as a European regulator,
Christine Lagarde said today, the recent rise in inflation in the eurozone was due to temporary factors and is expected to slow next year to 1.7%, so inflationary pressures in the European region are not the same.
On Friday, index dynamics in Asia were mixed, with Japan’s Nikkei index rose by 2.1%, China’s Shanghai Composite index fell by 0.8%,
and Hong Kong’s Hang Seng index losing 1.3%.
Indices in Europe were negative, with the FTSE, DAX and CAC 40 indices falling by 0.4-1٪.
The Dow Jones and Standard & Poor’s 500 indices rose on Friday and ended a tumultuous week with slight rises,
backed by gains from Tesla and Facebook, which offset Nike’s collapse.
Nike stocks declined 6.3 percent and were the biggest drag on the Dow Jones and Standard & Poor’s 500 indices after its pessimistic sales forecast and warning of delays during the holiday shopping season, blaming the supply chain crisis.
The stocks of footwear retailer Foot Locker Retailer have also fallen sharply.
On the other hand, Facebook rose 2 percent and Tesla rose 2.7 percent.
Standard & Poor’s telecommunications services sector jumped 0.7 percent and was the second-largest sector gain of the day after the energy sector, up 0.8 percent.
Stocks rebounded from sharp sales at the beginning of the week,
partly linked to concerns about Evergrand defaults and the risks it could pose to global financial markets.
The Dow Jones Industrial Index rose 33.18 points or 0.1 percent to 34798 points,
Standard & Poor’s rose 6.5 points or 0.15 percent to 4455.48 points, and the Nasdaq Combined declined 4.54 points or 0.03 percent to 15047.7.
Over the week, the Dow Jones index rose 0.62 percent, Standard & Poor’s rose 0.51 percent, and Nasdaq 0.02 percent.
The Federal Reserve keeps its fiscal policy unchanged and a jump in the oil and stock markets:
The Fed published the results of its meeting yesterday, in which it announced that its fiscal policy would remain unchanged.
Evest follows developments in the trading markets around the world in the following report:
Topics:
Results of the Federal Reserve Board meeting in September
Asian stock exchanges are following Wall Street
After the September 21-22 meeting, the United States Federal Reserve announced that the interest rate (0-0.25% per year) would not be changed,
as well as continuing to buy back assets for a total of $120 billion on a monthly basis
(including US Treasuries in the amount of $80 billion and mortgage bonds worth $40 billion).
Results published at the end of the meeting showed that 9 of the 18 leaders of the United States Central Bank expect a base rate increase in 2022,
three of whom believed that the rate would rise twice next year.
The Fed cut its 2021 US GDP growth forecast to 5.9% from the 7% forecast in June,
and in 2022 it rose to 3.8% from 3.3%.
Expectations for the consumer price growth rate (personal consumption expenditure index) rose this year to 4.2% from 3.4% next year – to 2.2% from 2.1%.
Fed Chairman Jerome Powell said at a press conference that the Fed may announce the start of a reduction in the asset buyback program at the next meeting in November,
and the asset buyback program is likely to be completed by midday the next day.
Powell said the Fed could “easily” start cutting back on asset purchases early in November in the case of strong labor market data.
In the United States, stock indices rose by 1% on Wednesday, after the results of the September meeting of the Federal Reserve System.
US stock index futures rose during early morning trading on Thursday after the Federal Reserve board kept benchmark interest rates unchanged,
while indicating no immediate intention to remove stimulus policies.
Dow Jones industrial index futures gained 105 points.
Futures for the Standard & Poor’s 500 index and the Nasdaq 100 were traded in a positive zone.
Stocks closed higher in all areas during regular trading following the central bank’s suspension.
The Dow Jones index gained nearly 340 points, or 1%, in its first positive session in five days, the best day since July 20.
However, after advancing by more than 500 points at one point,
the benchmark of 30 stocks closed below its highest level during the day.
The Standard & Poor’s index advanced by 0.95%, also cutting a four-day loss streak and recording its best day since July 23.
The Nasdaq Composite Index ended the session up 1.02% higher, while the Russell 2000 outperformed the session, up 1.48%.
Stock index growth also prevailed in Asia (the Japanese stock exchanges were closed due to the autumn equinox holiday,
China’s Shanghai Composite index rose by 0.4%, and the Hong Kong Hang Seng Index – by 1%).
The market has also been supported by some easing of concerns about the financial problems
of Chinese development company China Evergrande Group, according to the Wall Street Journal.
On Monday, the company defaulted on loan payments to at least two banks.
In the meantime, a major section in Evergrande confirmed on Wednesday that interest payments on domestic bonds will be paid on time.
The company will pay investors 232 million yuan ($35.9 million) on Thursday.
Evergrande Xu Jiayin’s Chairman stated on Thursday that the company’s top priority is to help investors profit from the developer’s products.
However, it remained unclear whether the company will pay $83.5 million in interest on five-year dollar bonds,
a question that worries foreign investors the most.
Preliminary business indices in various countries will be published on Thursday.
The Bank of England, which is holding its meeting, will have to react in some way to rising inflation in August,
although the interest rate decision is unlikely to be too hasty.
In addition, in the United States, the Federal Reserve Bank’s National Activity Index will be issued in Chicago,
and traditional weekly data on initial unemployment benefit claims will be published.
The composite index of US business activity could rise to 58.3 points in September from 55.4 points in August.
Next comes the index of the United States’ Leading Economic indices.
On the oil market, prices continued to rise Thursday morning following the publication of the United States Department of Energy report
on the eve of the country’s oil reserves falling to their lowest level since 2018.
Brent crude futures’ cost for November was $76.27 per barrel (+ 0.1٪ and + 2.5٪ on Wednesday),
and West Texas Intermediate crude for November was $72.31 per barrel (+ 0.1٪ and + 2.5% on Wednesday).
According to the United States Department of Energy,
the country’s oil reserves fell last week by 3.48 million barrels (to 413.96 million barrels),
with a forecast for a reduction of 2.45-3.8 million.
Inventories at the terminal in Cushing, Oklahoma,
where oil traded on the New York Stock Exchange is stored, fell by 1.7 million barrels.
Royal Dutch Shell announced on Wednesday the reopening of a major pipeline transporting Mars crude
from the Gulf of Mexico to refineries on the Louisiana coast.
Market attention turns to the problem of lack of natural gas supplies, particularly in Europe,
which may affect the energy complex as a whole in winter, Bloomberg writes.
Goldman Sachs expects oil prices to rise to $90 per barrel.
The Federal Reserve keeps its fiscal policy unchanged and a jump in the oil and stock markets
Oil prices rise as US inventories decline: on Tuesday 21st September 2021, the American Petroleum Institute (API) declared a decline in crude oil stockpiles by 6.0108 million barrels by the week ending September 17th, exceeding analysts’ expectations by 2.400 million barrels throughout the week.
Topics:
Dubai’s gas tech conference report
Shell is off to the end of the year as an Ida’s consequence
Saudi Arabia remains China’s biggest oil supplier
Russia and Saudi Arabia are competing to export oil to China
Last Week
The API declared a decline in oil stockpiles by 5.437 million barrels for the last week,
while analysts’ expectations were 3.903 million barrels.
U.S. oil stockpiles lowered vastly in 2021, according to the API data it lowered by more than 76 million barrels, less than prior pandemic levels.
At the same time the latest data by Energy Information Administration (EIA) indicates that U.S oil reserves are less than 7%
than the average of the five years for the same time of the year to 417.4 million barrels.
The API declared a decline in gasoline stockpiles by 423.000 barrels for the week ending September 17th compared with last week’s decline by 2.761 million barrels.
Distillate stockpiles lowered by 2.720 million barrels this week compared with last week’s drop by 2.888 million barrels.
Cushing stockpiles dropped by 1.748 million barrels this week, while the last week drop was 1.345 million barrels.
On Tuesday oil prices rose before data publishing, as U.S crude oil reserves weekly declined, and OPEC’s production was under market’s expectations,
also U.S. oil production lowered due to hurricane Ida. West Texas Intermediate crude rose 0.31% on Tuesday afternoon before data publishing.
At midday West Texas intermediate crude was for 70.51$, to rise 0.33$ in the week and 0.22$ throughout the day. Brent crude oil rose 0.70% at 74.44$ a barrel.
Lately, U.S oil production fell by more than a million barrels in the last two weeks,
to 10.1 million barrels by the week ending September 10th as hurricane Ida led to suspension of production in the Gulf of Mexico.
According to BSEE, 16.64% of GOM’s production is still offline up till now.
This week the world’s biggest gas traders and producers are meeting in Dubai to attend the Gas Tech conference;
this is the first face to face main action since Covid-19 struck.
According to world oil, the report mentioned that the conference is held from 21st to 23rd September at a time Europe faces a gas problem,
as gas prices are jumping to high levels.
Experts warned of electricity cuts in some countries by winter.
“We hope that winter in the northern half of the earth won’t be cold or we will face problems.” Didier Holt, French ENGIE’s deputy executive director said.
German UNIPER SE mentioned that risks in this industry credit are rising and many companies would find problems in cash.
Den Hollander, UNIPER’s commercial director, said that there wasn’t anything to say that Russia would suspend its gas supplies to Western Europe.
He also mentioned that, Russian PJSC Gazprom needed to renew its domestic market reserves
as this is one of the reasons why Russia wouldn’t be able to increase its exports.
Shell declared that an offshore platform run by the company would be off by the end of the year as a consequence of hurricane Ida,
as the platform got structural damages.
Shell also mentioned that another platform affected by Ida would be back to work by the end of the year.
Ida was one of the most destructive hurricanes lately, affecting gas and oil production in the Gulf of Mexico,
about 95% of oil production was off.
This week, after twenty days of Ida’s arrival to shore, more than 20% of production is still off.
According to the International Energy Agency (IEA) Ida caused cumulative losses in oil supplies reaching 30 million barrels,
to be the first decline in international oil supplies in five months and also international reserves declined sharply.
The US oil production fell from 11.5 million barrels per day to 10 million barrels per day after hurricane Ida struck the Gulf coast,
according to the EIA. After three weeks of Ida, about 40% of shell offshore production in the Gulf of Mexico is still off.
Official Chinese data reported by Reuters on Monday shows that Saudi’s crude oil exports to China rose to 53% yearly in August,
keeping its position as the main exporter to the world’s biggest oil importer for the ninth month in a row.
In the last month China’s crude oil imports from Saudi Arabia, the world’s biggest oil exporter,
rose by 53% compared with August’s 2020.To reach 1.96 million barrels,
according to Reuters’s data calculations by ton, of China’s customs general administration.
In the last few weeks the Chinese refineries began to raise their crude oil imports after a decline for months in buying oil from the spot market,
as Covid-19’s closure measures were one of the reasons why China’s oil buying from the spot market lowered.
There was another decline in importing shares due to governmental restrictions on private refineries.
Saudi Arabia beats Russia again to maintain the first position,
not only because the biggest oil producers in OPEC diminished their reductions,
but also China diminished its imports for private refineries in the third quarter.
Russian ESPO blend crude has a big fame in these refineries, known as “Teapots”.
Russia was the second biggest crude oil exporter to China.
Its exports rose by 12.6% throughout the year to 1.59 million barrels per day in August,
Russian exports didn’t change in the last month compared with the previous month’s 1.56 million barrels.
Last year, Saudi Arabia and its partner in OPEC Russia were competing for the first place as the biggest oil exporter to China,
the world’s biggest oil importer.
Rising prices of Russian gas to China and oil is falling
The trading week began with declining oil prices, while an upcoming meeting of the Federal Reserve had a key role.
Evest follows developments in the trading market in the following report:
The price of Russian gas supplies to China in the third quarter of 2021 rose to $171 per thousand cubic meters after $147 in the second and $121 in the first quarter,
according to data from the General Customs Administration of the People’s Republic of China.
Russian gas futures are supplied to China via the Siberian gas pipeline, which is linked to the price of fuel oil and gas oil at 9 acres,
and the price of gas changes every three months.
Since supplies began at the end of 2019, they have only been declining,
following the downward trend in oil prices.
The minimum was passed in the first quarter of this year.
Among gas suppliers through pipelines, Russia continues to supply China with gas at the lowest price.
In July 2021, Turkmenistan received $238 per thousand cubic meters of gas, Kazakhstan – $195, Uzbekistan – $193, Myanmar – $362.
The Asian Platts JKM Spot Index (Japan and Korea mark – reflects the spot market value of goods shipped to Japan, South Korea, China and Taiwan) rose in July to $503 per thousand cubic meters; Russian liquefied natural gas was sold to China in July at an average of $441 per thousand cubic meters. In Europe,
the average spot price was also $441 per thousand cubic meters during July.
Negotiations for the supply of Russian gas to China have been going on for a long time (a framework agreement on key delivery conditions was signed again in October 2009),
and the partners were not in a hurry: They were all expected to get the most favorable price.
The annexation of Crimea led to an acceleration of negotiations,
and thus a radical change in Russia’s relationship with Europe, Gazprom’s main gas buyer.
Russian policy needed to break through in the eastern direction, and it was exactly two months from the moment signing the decree on the annexation of Crimea to the signing of the gas contract via the “Eastern Route.”
In July, supplies rose to 888 million cubic meters from 862 million cubic meters in June,
while an average of 29 million cubic meters is provided daily.
OOO Gazprom dobycha Noyabrsk, which operates Chayanda, reported that in July four gas wells were operated in the field in the area of Integrated Gas Processing Unit No. 3 (UKPG-3), and low-temperature gas separation lines were operated in UKPG.
Oil prices declined on Monday under the strength of the US dollar before a two-day meeting of the Federal Reserve system began.
Experts interviewed by Bloomberg say the Federal Reserve Board meeting on September 21-22 could lay the groundwork for reducing asset buybacks,
which currently stand at $120 billion a month.
“The outlook for Fed stimulus cuts is putting pressure on the oil market,” said Vandana Hari,
founder of Vanda Insights, a Singapore-based consultancy.
The factors that had supported oil prices in the past week, in particular,
the significant reduction in raw material reserves owing to the slow recovery in production in the Gulf of Mexico, had not yielded any results.
The cost of Brent crude futures for November on the London Stock Exchange ICE Futures by 8:15 Moscow time on Monday is $74.8 per barrel,
$0.54 (0.72٪) lower than the closing price of the previous session.
As a result of Monday’s trading, these futures fell $0.33 (0.4%) – to $75.34 per barrel.
The price of West Texas Intermediate crude futures for October in electronic trading on the New York Mercantile Exchange (NYMEX) fell to $71.35 per barrel,
$0.62 (0.86%) lower than the final value of the previous session.
On Friday, these futures fell by $0.64 (0.9%) – to $71.97 per barrel.
At the end of last week, the price of Brent crude has risen by 3.3% and West Texas Intermediate by 3.2%.
The ICE index, which tracks the dynamics of the dollar against six currencies (euro, Swiss franc, yen, Canadian dollar, pound sterling,
and Swedish krona), added 0.16% on Monday.
A stronger US currency reduces the attractiveness of commodities, including oil, to investors.
Stock indices in Asia and the Pacific show positive dynamics on Monday: Japan’s Nikkei 225 rose by 0.58% and China’s CSI300 by 1%.
While US S&P 500 futures lost 0.75%.
The U.S. stock market closed in the red zone on Friday against the backdrop of weaker-than-expected US consumer confidence data.
Over the past week, the Dow Jones index has fallen by 0.1%, the S&P 500 – 0.6%,
and the Nasdaq composite – 0.5%.
Thus, the consumer confidence index, calculated by Michigan University,
at the beginning of September was 71 points compared to 70.3 points the previous month.
Analysts expected the index to rise to 72 points on average.
In general, US stock market trading in recent days has been quite volatile owing to mixed economic signals,
as well as the uncertainty associated with the spread of the new Delta strain.
According to analysts, US stock indices dynamics are unstable,
as investors do not know how to evaluate the latest statistics and their potential impact on the Fed’s further actions.
Rising prices of Russian gas to China and oil is falling
