Strong support for stock markets and oil is still suffering

Strong support for stock markets and oil is still suffering: Two days after the meeting, the results of the Federal Reserve were as expected, by maintaining levels of interest rates unchanged.

This supported stock markets all over the world.

Evest continues to follow up the echo of these results on markets.

 

Oil completes its bearish march

Oil prices continued to fall today after the US Department of Energy announced increasing in oil reserves in-country for the fourth week in a row.

 

Brent crude futures

The cost of Brent crude futures for May on the London Stock Exchange for futures reached $ 67.59 a barrel,
which is less than $ 0.41 (0.6%) for the price of closing in the previous session.

On Wednesday’s session, these futures fell by $ 0.39 (0.6%) to trade at $ 68 a barrel.

 

West Texas Intermediate crude oil futures

The price of West Texas Intermediate crude oil futures for April in electronic trading on the New York Mercantile Exchange ( NIMEX) reached $ 64.22 a barrel.

This was $ 0.38 (0.59%) below the level of closing in the previous session.

On Wednesday, the value of these contracts declined by $ 0.2(0.3%) to record $ 64.6 a barrel.

Also on Wednesday, the US Department of Energy announced that US oil inventories increased by 2.4 million barrels last week.

 

Bloomberg

Experts interviewed by Bloomberg predicted an increase in oil reserves by 2.7 million barrels,
according to a survey by Standard & Poor’s Global Platts, an increase of 400.000 barrels.

 

Despite the US Department of Energy’s “downward” data, the market remains optimistic about oil demand prospects,
according to Standard & Poor’s Global Platts.

 

Vaccination against the Covid-19 virus provides hopes to control the epidemic as global economic activity gains momentum.

 

There are concerns about vaccinations in Europe especially after a suspension of the AstraZeneca vaccine in some countries. However, analysts expect an increase in traveling and demand for gasoline and aviation fuel in the United States of America as a result of successful vaccinations.

 

Dow Jones and Standard and Poor’s 500 achieve new records

Yesterday, US stocks closed at a high price, when Dow Jones and Standard and Poor’s 500 reached their highest levels at all.

Stocks have been supported through the results of the Federal Reserve meeting.

As expected, Central Bank has not changed monetary policy standards, while significantly improving economic prospects.

Thus, the GDP growth estimate in 2021 was raised to 6.5% from 4.2%,
while expectations of unemployment rates fell by 4.5% from 6.4%, at the end of the year.

 

As for inflation, it is expected to rise to 2.4%by the end of 2021, above the Federal, s target of 2%. However,
the surplus will not last long, as in 2022, inflation will decrease below the target level.

Federal Reserve Chairman, Jerome Powell also stressed that American monetary policy will remain very soft for a long time to come. Members of the Federal Open Market do not expect an increase in main interest rates till the end of 2023.

 

The US Department of Commerce

In terms of statistics, the US Department of Commerce stated that the number of houses launched in the United States in February decreased by 10.3% compared to the previous month, reaching 1.421 million at an annual rate.

 

AS observed, the decline was associated with very cold weather in many parts of the United States,
as it had a very negative effect on construction activity in last month.

 

The Industrial index

As a result of trading, the Dow Jones Industrial index rose by 0.58% to record 33.015.37 points.

Boarder Standard and Poor’s 500 index rose by 0.29% to record 3974.12 points,
while Nasdaq Composite for high technology rose by 0.40% to reach 13.525.20 points.

 

United States government long-term bond

United States government long-term bond yields remained high during the Asian session,
as investors of stocks chose to focus more on inflation expectations.

 

US government’s ten-year bond returns rose by 1.6550%, not far from their highest level since January, last year.

The difference between bond returns for 2 years and 10 years basis points,
was near the highest level since August 2019.

McDonald’s fast-food shares rose by 1.9%, as analysts in Deutsch Bank raised their fair value estimates and improving their recommendations for buying shares.

 

Lennar Construction Company, which recorded better revenues than expected and modified profits for the first quarter,
rose by 13.8%, while Lands END retail shop, which also recorded a better quarterly financial statement than expected, rose by 9.7%.

 

Meanwhile, Developed Bilge Power for fuel cells dropped by 7.9%, after the company announced that it would repay its financial statements for 2 fiscal years 2018 and 2019, as well as some quarterly results for the fiscal year 2020.

 

Apple

Apple for iPhone industry decreased the value of its share by 07%.

 

Asian stocks are in the green area

The most important stock markets in Asia recorded significant gains in prices, today, as the possibility of continuing extremely expansionism monetary policy by the US Federal Reserve provided momentum not only in the United States but also in Asian stock markets too.

 

Today, Asian stocks rose after US Federal Reserve Board pledged to maintain its recent monetary policy yesterday and it also expected a hard jump into US economic growth this year, as the Covid-19 crisis declined.

 

Asia and Pacific MSCI index

Asia and Pacific MSCI index rose by 0.99%, while China’s leading stock index rose by 0.46%.

 

Australia

Australian main index decreased by 0.3%, during today’s trading.

 

Japan

In Japan, the major Nikkei 225 index closed at 1%,
while E-MINI futures in S&P 500 index rose by 0.3%.

 

South Korea and Hong Kong

Main stocks in South Korea and Hong Kong jumped by more than 1% each,
following the powerful Wall Street session yesterday.

 

DAX may reach a new record level

Today, experts expected that the German Pioneer DAX index to achieve a new record,
like 2 hours before trading, it was evaluated by an increase of 0.7%, to trade at 14700 points.

An Unexpected Decline in US Crude Oil Inventories

An Unexpected Decline in US Crude Oil Inventories: Yesterday, Tuesday, March 17, 2021,
the American Petroleum Institute (API) announced a sudden decline in US crude oil inventories by one million barrels for the past week ending on March 12, after analysts’ expectations revolved around an increase in inventories by 2.964 million barrels for this week.

The American Petroleum Institute recorded a sharp increase in oil inventories in the previous week, which reached 12.792 million barrels after analysts had expected an increase of 816 thousand barrels, which is an estimate much lower than the actual number recorded by the API.

Crude oil prices this week

The decline in oil prices increased on Tuesday ahead of the release of the American Petroleum Institute data.

WTI crude fell $ 0.68 on the day (-1.04%), at $ 64.71.

Despite its decline for that day, West Texas Intermediate crude was still trading above $ 0.70 a barrel during the same time last week.

The benchmark Brent crude oil price decreased at the same time of today by $ 0.55 (-0.80%) to $ 68.33,
or about $ 0.80 per barrel for the week.

After the release of the American Petroleum Institute data,
the WTI crude index was trading at $ 64.94, while Brent crude was trading at $ 68.47.

Weekly energy production rates

Average daily oil production for the United States increased by 900,000 barrels to 10.9 million barrels per day,
according to Energy Information Administration (EIA) data.

The EIA also released data indicating that gasoline inventories decreased, by 926 thousand barrels from the week ending March 12,
in addition to a decrease of 8.499 million barrels in the previous week.

Analysts had expected a decline of 2.996 million barrels during the week.

Distillate inventories also increased this week, by 904 thousand barrels, after a decrease of 4.796 million barrels last week.

Factors That Will Lead to a Decline in Oil Prices In the Coming Period

US President-elect Joe Biden plans to carry the first large tax increase since 1993,
to help fund a long-term economic program.

Some analysts have pointed to the possibility of a decline in crude oil prices in the coming period as a result of Biden’s plans to raise taxes. This decrease in prices is also due to investors thinking about the potential impact of implementing these plans and their impact on the companies’ financial sectors.

Changes in the Oil Supply Market for India

The United States overtook Saudi Arabia as the second supplier of crude oil to India.

Last February, India significantly boosted its imports of crude oil from the United States, at the same time reducing its purchases from the Kingdom of Saudi Arabia, the largest oil exporter in the world, to the point that it changed the ranking between Saudi Arabia and the US, which has made US top Saudi Arabia as the second-largest supplier of oil in India, according to data released by Reuters on Monday.

 

India

In recent months, India, the world’s third-largest importer of oil, has been trying to diversify its crude oil imports and not depend largely on Middle Eastern oil.

This situation was the result of strict OPEC policies, rising oil prices, and instability in the state of the market,
which affected India’s oil consumption and its economy.

 

OPEC cuts to oil production and additional Saudi cuts

This year, OPEC cuts to oil production and additional Saudi cuts have reduced the market availability of Saudi crude oil.

 

the increase

Also, the increase from West Texas Intermediate crude against Brent at the end of last year and at the beginning of this year increases India’s appetite for increasing its purchases of American crude oil, according to “Refinitiv” analyst Ehsan Ul Haq told Reuters.

Reuters commercial sources

According to Reuters commercial sources, India’s imports of crude oil from the United States rose 48% over the course of a month to a record high of 545,300 barrels per day in February.

This changed the arrangement and made the United States the second-largest supplier of oil to India, after Iraq.

 

Kingdom of Saudi Arabia

The ranking of the Kingdom of Saudi Arabia, which has always been the highest or second-largest supplier to India during the past ten years, fell to fourth place in February, as Indian imports of Saudi oil declined by 42% per month to their lowest level in a decade, which is 445,200 BPD, according to data published by Reuters.

India could keep imports from Saudi Arabia low this month and the following month, after OPEC’s cuts were described by India as “Artificial cuts to keep the price going up”

India relies on imports for more than 80% of its consumption, and it imports 60% of crude oil from the Middle East.

It is reported that India is now asking the Indian state-owned refineries, for its strong aspiration to diversify imports away from the Middle East, as the third-largest importer of oil in the world is not satisfied with OPEC’s policies in managing the oil market and raising its prices.

The Attempt to Retrieve the UAE Oil Cargo Held In the United States

A company controlled by the Emirate of Fujairah’s ruler has requested the US authorities for the oil cargo
that had previously seized it, as the US claimed that the cargo was carrying Iranian crude oil. 

 

According to Bloomberg

According to Bloomberg, Fujairah International Oil and Gas Corporation (FIOGC) said,
before a court in Colombia, that the oil cargo (two million barrels of crude oil) originally came from Iraq

— but it did not disclose the supplier— then the UAE company sold the crude oil to a buyer from China.

Early last month, reports said the United States would detain the ACHILLES oil tanker, which was said to be on its way to the US coast. 

According to Bloomberg, the owner of the giant oil tanker ACHILLES (the Greek company Capital Ship) informed the United States that it may have loaded Iranian oil on board without knowledge, believing that the crude oil came from Iraq.

However, Fujairah International Oil and Gas Corporation stated that the cargo was Iraqi.

 

According to a Reuters

According to a Reuters report, Iran has denied ownership of the oil cargo being held in the United States.

It indicated that the cargo is not the property of the Iranian state. Tehran said the US seizure of the ship was an act of piracy.

“This area belongs to the private sector,” an Iranian Foreign Ministry spokesman said at the time.

Iran also said that the United States owes it about $ 70 billion in lost oil revenues due to unilateral sanctions,
and that repaying these lost revenues will be a prerequisite for negotiations with the Biden administration over the US returning to the Iran nuclear deal.

Oil reduces for the third session in a row, stocks are in the green area

Oil reduces for the third session in a row: Market participants are waiting for the Federal Reserve meeting which begins today and will continue till tomorrow so as to find the monetary policy which is expected to remain unchanged, in addition to identifying any new debt statistics regarding the performance of American economy.

 

The oil retreats for the third session in a row

The oil prices respectively fell for the third session because of expectations of increasing inventories in the United States and precautionary stop from Germany, Italy, France, and Spain to use AstraZeneca vaccine, waiting for a judgment of European Medicine Agency.

 

Market participants expect the possibility of continuing growth in US inventories.

Oil prices have also been affected by the low demand for raw materials in Europe,
according to trading data.

 

Futures of US West Texas Intermediate fell by 0.96% to record $ 64.76 a barrel.

Futures of Brent crude oil also retreated by 0.9% to reach $ 68.26 a barrel.

 

Owing to severe cold weather which covered a number of American states in February, this year,
causing suspension in the work of many oil refineries, investors expect increasing oil reserves in storage facilities abroad.

Analysts also expected that these inventories may rise by 2.7 million barrels after they rose by 13.8 million barrels in the previous week.

 

Inventory data by US Petroleum Institute is supposed to be issued today,
while official data of inventories in the US Energy Information Administration will be released tomorrow.

 

The European Medicine Energy (EMA)

What makes the situation more complicated is, The European Medicine Energy (EMA) investigations into a number of incidents with European Union patients who received a vaccine from the same group of AstraZeneca vaccine, which by its turn led to some complications.

In this regard, Austria, Estonia, Lithuania, Latvia, Luxembourg, Denmark, Bulgaria, Norway, Iceland, Slovenia, Cyprus, Italy, France, Germany, and Spain stopped using this vaccination.

 

Actions taken by these countries led to increase tensions in markets regarding vaccinations of the world population.

According to analysts, this incident can slow down European economic recovery after Covid-19 and prevents the return of oil demand.

 

While this position raises concerns about the pace of vaccination efforts in European countries, it also boosts fears of delaying economic recovery in Europe,
which is one of the most affected areas of the epidemic.

 

Japanese Nikkei rises

On Tuesday, Tokyo Stock Exchange closed in the green area for the sixth session in a row,
as technology shares were recovered because of Nasdaq’s recovery on the previous day in New York, but investors had been enthusiastic waiting for Federal Reserve Bank’s meeting.

 

The main Nikkei index

The main Nikkei index ended its trading in gains by 0.52% to record 29921.09 points,
while the broader Topix index rose by 0.65% to reach 1,981.50.

 

Wall Street American Technology stocks

On Monday, Wall Street American Technology stocks were recovered after they suffered from rising US bond revenues and inflation concerns in previous sessions.

 

Tokyo

In Tokyo, investors as in Wall Street were relatively waiting for these concerns before hearing new comments from Federal Reserve,
in addition to macroeconomic expectations.

 

China’s stock markets & Hang Seng Index in Hong Kong

On the other hand, on Tuesday afternoon, China’s stock markets were also in the green area,
due to rising Hang Seng Index in Hong Kong by 0.32%.

ASX 200 index rose by 0.8% or 54.1 points to close at 6827.10 points.

Wall Street Journal

According to Wall Street Journal, authorities in Beijing asked Ali baba to sell media assets,
for fear of growing influence on the group founded by Jack Ma on Chinese public opinion.

In Hong Kong, Alibaba shares fell by 0.18%.

 

Expectations for a recovery in DAX, today

Yesterday, European stocks retreated, as Germany stopped using AstraZeneca vaccines,
on a background of reports that they caused blood clots in some patients.

 

On Tuesday, in pre-trading hours, the DAX index rose by 14500 points.

Before 2 hours of trading, IG is estimated up by 0.3%.

This means that the DAX index is still within sight of its highest level that it reached at 14595 points from last week.

 

US Three indicators are in a green area

This week began a good start in Wall Street, as some optimism was previously ahead of Fed’s monetary policy meeting.

Continued growth hopes have remained to smash record figures in Wall Street on Monday.

 

Dow Jones Industrial, Standard and Poor’s 500

Dow Jones Industrial, Standard and Poor’s 500 were rising once again in a short time before closing trading,
as they both reached their highest levels.

 

American Main Dow Jones index rose by 0.53% to record 32953.46 points.

Now, Its highest record is 32973 points.

Standard and Poor’s 500 indexes rose by 0.65%, to trade at 3968.94 points.

Among Technology indicators, Nasdaq 100 index has been able to increase by 1.12% to record 13082.54 points.

The Federal Reserve meeting

At the end of the Federal Reserve meeting which will continue for 2 days on Wednesday,
it is expected that US Central Bank will repeat its current accommodative monetary policy,
as investors are waiting for expectations regarding the health of the economy.

 

New York Investment Bank

According to New York Investment Bank, Goldman Sachs,
growth in the United States is supposed to reach 7% this year,
while currently, the consensus is only a rise in activity by 5.5%.

 

It depends on a new plan to support the economy through infrastructure investments, which this time can exceed $ 2 trillion, or even $ 4 trillion,
including sectors such as health or education.

 

In terms of statistics, the Empire State index for the industrial activity of New York Federal Reserve Bank rose by 5 points this month,
to trade at +17.4, which is its highest level since last summer, while the consensus expected less obvious gains.

Oil breaks the upswing after 7 consecutive weeks of gains Brent crude price failed to reach $ 70 a barrel last week.

 

In fact, oil prices still receive support from low production by major oil producers
and optimism regarding demand recovery during the second half of this year.

Last Friday, Brent crude price for May 2021 delivery, retreated by 41 cents or 0.6% to record $ 69.22 a barrel.

Similarly, West Texas Intermediate for April 2021 delivery, declined by 41 cents to reach $ 65.61 a barrel.

However, both Brent and West Texas Intermediate ended the week unchanged
after prices touched their highest levels for a short period of 13 months, on Monday.

This took place after 7 consecutive weeks of gains.

 

Request for the most dangerous assets such as oil is still supported
by the White House aid package and optimistic results of vaccines daily.

 

the Organisation of Petroleum Exporting Countries (OPEC)

For its part, the Organisation of Petroleum Exporting Countries (OPEC) expects a stronger recovery in demand for oil this year.

This casts its weight in the second half of this year.

Last week, OPEC with its allies and Russia decided to keep restrictions of production almost unchanged.

 

The US oil producers were slowed down as they reduced the number of operating oil
and natural gas platforms for the first time since November, according to data by Baker Hughes.

 

Analysts said that the strong recovery expected in the second half of this year indicates that the global economy will recover. Therefore, expectations of oil demand will be approaching the elimination of COVID-19 effects.

 

The continued rise in oil prices is expected to encourage American producers to increase production
which finally may in turn affect prices, according to JPMorgan notes.

 

JPMorgan estimates

JPMorgan estimates that the average US oil production will reach 11.36 million barrels a day
during this year compared to 11.32 million barrels a day in 2020.

 

Earlier this week, the US government amended its expected reduction in 2021 for its crude production.

Production is expected to be reduced by 160,000 barrels a day to reach 11.15 million barrels a day.

This decline is slower than previous monthly expectations of a decline by 290,000 barrels a day.

 

Oil prices during a week

According to data by Evest, oil prices fell during the first two sessions of the week (8-9 March),
due to the pressure of the strong dollar.

Sources showed that US crude inventories rose by 12.8 million barrels in the week ending on March 5,
overheating expectations of an increase by 816, 000 barrels which were expected by analysts in a Reuters poll.

 

The black gold Market

The black gold Market recorded positive movements during the following two sessions (10-11 March),
thanks to optimistic expectations of the momentum of global economic growth
of the organization for Economic Cooperation and development (OECD)
and a sharp decline in gasoline reserves in the United States of America.

 

In addition, oil prices are also benefiting after US President Joe Biden signed on 3/11
an economic stimulus worth the US $ 1.9 billion.

The growth of economic expectations will enhance the demand for fuel next time.

At the last session of the week 12/3, the market was corrected after the two previous sessions of gains.

At the end of the session, North Brent oil price fell by 0.4 cents or 0.6% to record $ 69.22 a barrel,
after it closed at its highest level on March 11 since May 28 2019.

 

The US light crude oil (WTI)

Meanwhile, US light crude oil (WTI) declined by 0.4 cents or 0.6%, to close at $ 65.6 a barrel.

Throughout the week, Brent and West Texas oil prices retreated by 0.2% and 0.7% in a row.

Thus, the results of this week put an end to the rise in Brent oil prices all over 7 consecutive weeks.

 

Despite the decision adopted by the Organisation of Petroleum Exporting Countries (OPEC) and oil-producing countries,
earlier in this month, regarding extending the reduction of production till April,
oil prices have not been increasing this week,
as huge global oil reserves can compensate for risks of reduction in supplies in the short term.

Saudi oil installations

News that was issued earlier this week for attacks on Saudi oil installations,
also failed to maintain rising oil prices for a long period.

 

Due to the large surplus of all major producers at present,
supply concerns because of issues such as tensions in the Middle East or geopolitical risks are inappropriate,
because if any state stops production, another one will compensate for its production.

 

Therefore, until the market returns to a balance of supply and demand,
oil prices will be determined based on OPEC’s discipline of application policy and demand recovery.

 

Why did oil decline and not complete its rise?

On Friday, oil prices fell, after a week full of events which were distinguished by increasing crude stocks,
in the United States in addition to rising bond prices.

 

On Friday, interest rates of US Treasury bonds for 10 years,
began to rise once again to exceed 1.64% during the session.

This is the highest level in a year.

 

There are also some profit takings while waiting to know how US refineries will resume their activities
when they were closed during a cold wave in mid-February and recently entered maintenance season.

This week, crude oil prices will be targeting the high risings of last Monday.

 

At the beginning of the week, West Texas Intermediate crude oil recorded $ 67.98 a barrel.

This is the first time since October 2018.

On the same day, Brent crude oil briefly exceeded a barrier of $ 70,
approaching its former record on January 8, 2020.

 

OPEC’s last report

On Friday, in particular, investors adopted data involved by the Organisation of Petroleum
Exporting Countries (OPEC) on the previous day.

In its latest monthly report, the Organisation has adjusted its positive forecasts to increase recovery in global demand for black gold this year.

Now, this is expected to be about 5.9 million barrels of oil a day, to reach 96.3 million barrels a day.

In its last report on markets, OPEC said that there was a wave of financial stimulation in place
and that continued deployment of the COVID-19 vaccine in many countries will increase prospects for economic growth.

This year, oil demand will significantly increase.

The organisation expects that global oil demand will rise by about 200,000 barrels a day
and it also expects that the world economy will grow by 5.1%, or by about 0.3%, thanks to 2 main factors:

a US stimulus package worth $ 1.9 billion and continuing recovery of economics in Asia.

However, OPEC also expects unexpected volatility in the oil market during the coming months.

Estimates indicate that demand for oil in the first 6 months of 2021
will fall because of measures to reduce economic activity due to the epidemic.

Oil demand will increase during the second half of 2021 because of an acceleration of economic activity,
as the epidemic is likely to be relatively settled by that time.

 

Oil breaks the upswing after 7 consecutive weeks of gains