Oil Rises on Reports of Significant Decline in Crude Inventories

Oil Rises on Reports of Significant Decline in Crude Inventories: Oil prices increased in early Asian trading on Wednesday, July 3,
after data showed a larger-than-expected drop in U.S. crude inventories.

Contents

Gold Steadies

Oil Rises

Inflation Slows Down

Gold Steadies as Investors Focus on Fed Meeting Minutes

Gold prices remained stable as investors awaited the release of the U.S. Federal Reserve’s meeting minutes at 18:00 GMT.
Fed Chairman Jerome Powell mentioned the need for more data before reducing interest rates to ensure recent inflation declines accurately reflect the efforts to control prices.

Oil Rises on Reports of Significant Decline in U.S. Crude Inventories

Oil prices increased in early Asian trading on Wednesday, July 3, after data showed a larger-than-expected drop in U.S. crude inventories.
This boosted hopes for strong fuel demand during the summer driving season in the world’s largest oil consumer.
Brent crude futures rose by 16 cents (0.2%) to $85.60 per barrel,
while U.S. West Texas Intermediate crude futures increased by 14 cents (0.2%) to $82.95 per barrel.

Eurozone Inflation Slowdown Raises Rate Cut Hopes

Eurozone inflation slowed in June, strengthening evidence that price pressures gradually align with the European Central Bank’s 2% target.
Consumer prices rose by 2.5% annually, down from 2.6% in May,
aligning with Bloomberg economists’ estimates.
Contrary to expectations, the core inflation measure, excluding volatile items like food and energy, remained unchanged at 2.9%.

Oil Rises on Reports of Significant Decline in Crude Inventories

Oil rises and the United Nations lowers the economic growth outlook for 2022

Oil rises and the United Nations lowers the economic growth outlook for 2022:
The United Nations lowered its global economic growth outlook this year to 3.1% from 4% in January, mainly due to events in Ukraine.

Evest follows market developments in the following report.

The United Nations lowers the economic growth outlook to 3.1

Global inflation is expected to reach 6.7% this year, more than double the 2010-2020 average of 2.9%.

Global GDP growth is expected to be 3.1% in 2023 compared with the previously projected 3.5%.

According to a report prepared by the United Nations Department of Economic and Social Affairs, “the global economy, which has not had time to fully recover from the pandemic-related downturn, may be approaching a new crisis in 2022.” The military conflict in Ukraine has “effectively ended” the post-pandemic recovery that began in 2021.

In addition to Europe’s major humanitarian crisis, events in Ukraine have led to further increases in food and commodity prices and compounded inflationary pressures around the world. “The geopolitical uncertainty caused by the conflict has adversely affected business confidence and investment in the manufacturing sector, exacerbating short-term economic prospects,” said Gregor Agabekian, an economist at the ministry. “Of course, the conflict in Ukraine was not the only factor that led to the revision of previous expectations.”

According to the UN predictions, China’s economy will rise by 4.5% in 2022, not by 5.2% as previously predicted.

US GDP will be up 2.6% this year and 1.8% next year.

The underlying outlook is due to high risks associated with a further escalation of the conflict in Ukraine, the potential for a new COVID-19 pandemic and the faster-than-expected tightening of the world’s monetary policy, due to high inflation.

“In a statistical sense, reducing the global growth outlook in our report has many components, but primarily due to the more modest outlook for the world’s leading economies – the United States and China,” Agapikian said. 2.6% in 2022, due to high inflationary pressures – the country is facing a completely unprecedented inflation level in recent decades, more specifically in four decades, which has had a negative impact on private consumption.”

Other factors include the Federal Reserve’s strong monetary tightening and the strengthening of the US dollar, which has adversely affected foreign trade.

The EU’s growth forecast has also been revised downwards to 2.7% from 3.9%. The sharp rise in energy prices is a serious negative shock to the region. The report says the sudden disruption of oil and natural gas supplies from Russia will likely lead to a recession in many EU countries.

In 2020, the EU imported 57.5% of total energy consumed, while imports from the Russian Federation accounted for nearly 25%. Inflation across the EU accelerated sharply in 2021-2022, reaching multi-decade highs in many countries. Hence, the rapid rise in spending has reduced household budgets and affected private consumption, as well as urged firms to reduce or delay investment.

“We expect a contraction in the Russian Federation’s economy of approximately 10% in 2022 due to unprecedented trade and financial sanctions that have come into force since February 2022,” Agapikian said. Ukraine’s economy is expected to contract by 30-50% in 2022, with massive infrastructure destruction, population displacement and a halt to economic activity.

Overall, GDP growth estimates for emerging market countries worsened this year, reaching 4.1% from 4.5%.

Oil rises to $110

Oil prices rose on Thursday, correcting after falling at the end of the previous session.

Growing fears of a possible recession in the United States as a result of the Fed’s swift tightening of monetary policy sent the stock market crashing on Wednesday, sending the oil market slumping, despite data on a reduction in US inventories.

According to experts: “Inventory data works in favour of higher oil prices, but this does not matter in a recession concern.”

The price of July Brent oil futures on the London Stock Exchange Futures was $110.69 per barrel on Thursday, $1.58 (1.45%) higher than the closing price of the previous session. As a result of Wednesday’s trading, these futures declined by $2.82 (2.5%) to $109.11 per barrel.

The price of West Texas Intermediate oil futures for June in electronic trading on the New York Mercantile Exchange (NYMEX) was $110.55 per barrel by this time, $0.96 (0.88%) higher than the final value of the previous session. On Wednesday, these futures fell by $2.81 (2.5%) to $109.59 per barrel.

On Wednesday, the US Department of Energy said that US commercial oil inventories fell 3.39 million barrels last week to 420.82 million barrels, 14 percent below the five-year average. Experts surveyed by Bloomberg predicted an increase of 2 million barrels in oil inventories.

The Department of Energy said that inventories at the terminal in Cushing, Oklahoma, where oil traded is being stored on the NYMEX, fell by 2.4 million barrels to 25.8 million barrels. Oil production in the United States increased by 100 thousand barrels compared to the previous week – reaching 11.9 million barrels per day.

Gasoline commodity inventories decreased by 4.78 million barrels and distillates increased by 1.24 million barrels. Analysts expected a decline of 1.4 million barrels and 600 thousand barrels, respectively.

Experts note that the market is highly volatile and, in the meantime, investors have sufficient reasons to sell. Among the factors that may contribute to the decline of the oil market are, in particular, signs of a possible easing of US sanctions against Venezuela.

The Associated Press reported, citing Washington sources, that oil and gas giant Chevron Corp. was given an opportunity to begin negotiations with Venezuela’s PDVSA to renew the license. However, it still does not have the necessary resources to extract or export oil from the country.

Oil rises and Asian indices decline despite strong Chinese data

Oil rises and Asian indices decline despite strong Chinese data: Oil is trying to take advantage of OPEC’s recent decisions, to offset losses suffered in the past few weeks, as the situation has been precarious due to successive increases in US inventories.

Evest follows the markets situation in the following report.

Topics:

Oil rises amid supply shortages

Saudi Aramco

China’s Foreign Trade Balance Surplus Exceeds Expectations

China’s exports to Japan

Asian indices are in the Red Zone and strong job data support Wall Street

Jerome Powell

Oil rises amid supply shortages

Oil prices rose on Tuesday amid concerns that the market is at risk for supply deficiency due to the reluctance of OPEC +
countries to increase production above previously planned levels.

The OPEC + ministers unanimously decided last Thursday to continue following the plan outlined earlier,

despite calls by US President Joe Biden to accelerate production increases.

OPEC + has been rising production by 400 thousand barrels per day on a monthly basis since July in order to offset the 9.7 million barrels per day
taken under the peak of the Covid-19 pandemic and meets monthly to assess the market situation.

At the end of last week, Saudi Aramco, the Saudi state oil company, announced that it would raise oil prices of all grades in December for Asian
, American, Northwestern European and Mediterranean buyers.

The cost of Brent crude futures for January on the London Stock Exchange ICE Futures on Tuesday is $83.71 per barrel,
$0.97 (1.17%) higher than the closing price of the previous session.

As a result of Friday’s trading, these futures rose by $2.2 (2.7%) – to $82.74 per barrel.

The price of West Texas Intermediate crude futures for December in electronic trading on the New York Mercantile Exchange (NMX) is $82.31 per barrel,
$1.04 (1.28%) higher than the final value of the previous session.

At the close of Friday’s trading, these futures rose by $2.46 (3.1%) to $81.27 per barrel.

Overall, over the past week, the price of Brent crude fell by 1.2%, that of West Texas Intermediate – by 2.8%.

Saudi Aramco

Saudi Aramco will increase oil prices supplied to Asia by $1.1-2.8 per barrel in December, and the United States – by $0.5 per barrel,
for northwest European countries – will increase by $1-3.3 per barrel, for Mediterranean countries by $1.1.3 per barrel.

Mike Mueller, chairman of Vitol Group, the world’s largest independent oil trader, said OPEC + and Saudi Arabia, in particular,
are unlikely to change their approach to restoring production volumes.

According to Bloomberg, Mueller added: “Saudi Arabia has raised oil prices above all expectations.”

For her part, US Energy Secretary Jennifer Granholm said on Sunday that she was still considering selling oil from the Strategic Petroleum Reserve (SPR).
and would carefully assess US oil reserves data, which will be released this week.

China’s Foreign Trade Balance Surplus Exceeds Expectations

China’s foreign trade balance surplus rose to a record high in October, exceeding experts’ expectations.

According to the General Customs Administration of the People’s Republic of China, last month’s foreign trade surplus was $84.54 billion,
compared to $57.32 billion in the same period the previous year and $66.76 billion in September.

Analysts polled by Wall Street Journal projected $62.74 billion for this index.

Export volumes increased by 27.1% compared to October last year – to $300.22 billion, and imports increased by 20.6%, to $215.68 billion.

Experts predicted an average increase of 22.6% in exports and 27.5% in imports.

China’s exports are growing steadily under strong global demand for domestic companies before the Christmas season,
as well as easing the country’s energy crisis. Analysts say weaker-than-expected import growth rates indicate weak domestic demand.

Exports from China to the United States increased by 22.7% to $53.77 billion in October, imports by 4% to $13.02 billion and the U.S. trade surplus by 30% to $40.75 billion.

China’s exports to Japan

China’s exports to Japan increased last month by 16.3%, to South Korea – by 33.1%,
to Australia – by 22.3%, to ASEAN countries – by 18% and to the European Union – by 44.3%.

The supply of rare earth minerals abroad rose by 89%.

Japan’s imports increased by 9.9%, from South Korea – by 22.3%, from Australia – by 24.3%, from the United States – by 4.6%, a
nd from ASEAN – by 23.1%. EU imports fell by 0.7% in October.

China increased its coal purchases dramatically last month – by 96.2%, and natural gas – by 24.6%.

Meanwhile, oil imports fell by 11.2%, crude copper – by 33.6%, and soybeans – by 41.2%.

China’s foreign trade balance surplus was $513.74 billion from January to October 2021, compared to $373.92 billion the previous year.

Exports for 10 months this year rose by 32.3%, to $ 2.7 trillion, exceeding the index for the whole of 2020.

Asian indices are in the Red Zone and strong job data support Wall Street

Stock indices in Asia and the Pacific show negative dynamics on Monday: Japan’s Nikkei 225 fell by 0.17% and China’s CSI by 300- 0.05٪.

US S&P 500 index’s futures fell also by 0.21%.

US stocks rose to new records on Friday against the backdrop of stronger-than-expected US labor market data.

The number of jobs in the US economy increased by 531 thousand in October, at a maximum rate of three months.

According to the adjusted data, the figure rose in September 312 thousand, not 194,000, as previously reported.

The unemployment rate in the United States fell to 4.6% in October,
the lowest level since March 2020, down from 4.8% in September.

Experts expected an average increase in the number of jobs in October of 450 thousand ,
and a decrease in the unemployment rate by an average of 4.7%.

Labor market situation is a key factor in FRS’ decisions on the future level of the basic interest rate.

Jerome Powell

Federal Reserve Chairman Jerome Powell said at a press conference following the November 2-3 meeting of the U.S. Central Bank
that job opportunities could be maximized in the US economy by the second half of 2022.

At the last meeting, the Federal Reserve decided to start reducing the asset buyback program.

The central bank said it would reduce asset buybacks in November by $15 billion and continue to reduce the program in December.

Pressure on the stock markets because of the Evergrande crisis and perfect performance for oil and gold

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

Evergrande’s crisis situation

Gold rises because of the Evergrand crisis

Variation in Asia’s Markets

Oil rises for the fifth consecutive session

The cryptocurrency market is quickly offsetting its losses

Evergrande supports the commodity market and puts pressure on the stock markets

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.

Evergrande’s crisis situation

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 rises because of the Evergrand crisis

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.

Variation in Asia’s Markets

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.

Oil rises for the fifth consecutive session

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 is quickly offsetting its losses

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.

Oil rises over 10% and Hurricane Ida supports crude

Oil rises over 10% and Hurricane Ida supports crude: World oil prices rose 10% over the week,
the strongest weekly gain since May 2020.

Evest follows developments in the oil trading market in the following report:

West Texas Intermediate crude futures jumped 10.6% to $68.74 per barrel for the fourth and final week of August,
the highest closing since August 12 and the largest weekly rise since June 2020.

Why did oil rise strongly last week?

One reason for the rally is that oil companies in the Gulf of Mexico began closing production before Hurricane Ida,
which is expected to hit the coast early next week, protecting mining bases.

This storm has been classified as devastating like Hurricane Laura Katrina.

In the past, Hurricane Katrina destroyed five states along the Gulf of Mexico,
cut oil supplies by 1.53 million barrels per day, and continued for weeks on end.

In 2020, Hurricane Delta also led companies to cut their production by 1.69 million barrels per day.

Latest coronavirus outbreak

An additional factor was that traders remained confident that fuel demand would return,
once China managed to curb the latest coronavirus outbreak and Pfizer Bionic Corporation obtained full approval for the Covid-19 vaccine from the Food and Drug Administration.

However, concerns about growing delta boom cases still stand, with some countries in the Asia-Pacific region,
including Australia, Japan, and New Zealand, imposing new restrictions to combat the outbreak of the new pandemic.

Crude oil prices rose sharply this week and, according to experts, they are expected to rise in the future.

The sharp increase also reversed last week’s recession.

At the time, West Texas Intermediate crude fell 9% and Brent crude 7.6%,
simultaneously marking the worst week since October last year.

“Traders are pushing up crude oil prices in anticipation of production disruptions in the Gulf of Mexico and expectations that OPEC+ will refuse to increase production given the risk of the spread of the coronavirus Delta variant, which could weaken demand for crude oil,” said Edward Moya, an analyst at OANDA.

The Gulf of Mexico accounts for about 17% of crude oil production in the United States.

the US Bureau of Environmental Safety and Environmental Enforcement

According to a report by the US Bureau of Environmental Safety and Environmental Enforcement,
crude oil producers have shut down 91% of their production in the Gulf of Mexico since last Saturday, as Hurricane Ida approached.

The fire at an oil platform in the Gulf of Mexico on Sunday forced the Pemex Group to stop operating 125 wells in the area.

Pemex’s president announced a return to normalcy on August 30.

But production in the Gulf of Mexico may also be disrupted by the ninth climate event of this season, Ida.

Karsten Fritsch, an analyst at Kommersbank, noted that on the U.S. side of the Gulf, “several oil companies are starting to evacuate their platforms and suspend production” because of this storm, which will turn into a hurricane on Sunday.

In addition, the number of oil rigs operating in the United States in the week ending August 27 increased by five units to 410 units,
according to Baker Hughes Oil Field Services.

The United States dollar falling also helped boost crude oil prices.

The US Federal Reserve Chairman Jerome Powell’s statement that gradual decline
was not linked to an increase in interest rates caused the US dollar to fall.

Powell said it is going to decline at the end of this year, but when the decline ends,
interest rates won’t be raised immediately.

Meanwhile, Matt Maley, strategist at Miller Tabak, finds that crude oil prices are 50% likely to rise based on technical analysis.

“Crude oil appears to be a golden crossover pattern on the weekly chart,” Mali said, as reported by CNBC International, Thursday.

The golden cross occurs when the smaller moving average (MA) crosses the average of the larger moving from bottom to top.

In this case, the 50-day moving average intersects the 200-day moving average on the weekly chart.

Mali said that since 2009, there have been only 3 gold intersections, followed by a sharp increase in prices, by about 20% to 50%.

Last week trading days

Light West Texas Intermediate crude closed at $68.67 per barrel,
and world benchmark Brent crude was at $71.67 during the week.

At the end of the last session of the week, the price of West Texas Intermediate crude jumped 2.3%, and Brent oil rose by 2%.

“Between Storm Ida, burning a rig in the Gulf of Mexico, and improved demand in the US and Asia,
everything coincided with a very positive week,” James Williams of WTRG Economics told AFP.

The crucial market event will be held on Wednesday with the meeting of OPEC +,
an organization made up of members of the Organization of the Petroleum Exporting Countries (OPEC) and ten allies.

The group should assess its current policy, defined on July 18,
of continuing to increase production slightly after cutting it dramatically last year to counteract lower demand and prices,
in the midst of the coronavirus pandemic.

OPEC has taken a prior decision to gradually increase production according to the state of the general market,
which it has recently introduced after production cuts to support prices,
after the major crisis that the oil market was exposed to as a result of the Coronavirus.

The COVID-19 has been affecting the commodity’s performance for nearly two years,
with the aviation sector, one of the largest affected sectors by the virus has been affected by oil.

Oil rises over 10% and Hurricane Ida supports crude