U.S. crude oil ended its three-day rise on Monday as a war of words between Saudi Arabia and Russia led to the postponement of the meeting from April 6 to April 9, and the United States seemed to show no signs of cutting production, while the market was worried that even if the countries reached an agreement It may not be able to offset the impact of a sharp drop in demand. Therefore, U.S. crude oil opened 10% lower on Monday and once recovered all losses. However, as market concerns rebounded, U.S. crude oil still closed with a drop of more than 9%.
However, there is news that Saudi Arabia and Russia are “very close” to reaching an agreement to limit production, and there are signs that Russia is already preparing for production cuts. At the same time, market risk appetite has recovered slightly, thus pushing oil prices slightly higher during the day.
Currently, the market is still paying attention to the United States’ production reduction trends. There are signs that the United States may be unwilling to reduce production. Due to low oil prices, a large number of shale oil companies in the country have shut down, and there has been a situation of passive production reduction. The United States may use This is an excuse to refuse to assume additional obligations. At the same time, whether the United States participates also determines whether Russia will cut production by 1 million barrels per day.
At the same time, the market will also pay attention to the statements of Norway and Brazil. The two countries are regarded as the suppliers of new production after the United States in the next ten years.
In addition, the decline in demand has also restricted the space for oil prices to rebound. Some analysts believe that due to the decline in demand, which may be as high as 20 million barrels per day, cutting production by 10 million barrels per day to 15 million barrels per day is insufficient. to offset the risk of falling demand.
In the short term, the market needs to continue to pay attention to the production reduction trends of various oil-producing countries, especially the stance of the United States. At the same time, focus on API crude oil inventory and gasoline inventory data during the day, and the EIA will also release its monthly short-term energy outlook report. Data shows that U.S. crude oil inventories are at risk of recording the largest weekly increase since records began in 2004.
The epidemic has slowed down and market risk sentiment has recovered slightly, pushing oil prices to rebound
On Monday (April 7), U.S. stocks hit their biggest gain in the past two weeks. Several of the most severely affected areas around the world have seen a slowdown in the growth of new cases. New York Governor Cuomo said that the death toll showed that the epidemic situation in New York State was stabilizing at a high level.
Affected by this, the S&P 500 Index rose to an intraday high in late trading and closed at its highest level since March 13. The S&P 500 rose 7.0% to 2,663.68 points, the Dow Jones Industrial Average rose 7.7% to 22,679.99 points, and the Nasdaq Composite Index rose 7.3% to 7,913.238 points.
The German stock market rose 5.8%, the largest one-day gain in two weeks, driving a strong rebound in European stock markets. As the growth rate of deaths from the epidemic dropped, the nationwide blockade measures implemented by Randian may be gradually relaxed. hope. There is news that Germany plans to gradually relax its blockade measures after April 19. The government has formulated a series of measures, including mandatory wearing of masks in public, restrictions on gatherings and fast tracking of infection chains, to help the country end its epidemic blockade measures. Afterwards, normal life gradually resumed.
Affected by this, the British FTSE index closed up 3.08%, and the French CAC-40 index closed up 4.61%. The pan-European STOXX 600 index also recorded its largest single-day gain in two weeks, closing up 3.7%.
Affected by the rise in global stock markets and the rebound in market risk sentiment, oil prices rebounded slightly.
Saudi Arabia Saudi Arabia and Russia are “very close” to reaching an agreement to limit production, with the latter saying it is ready to cut production significantly
A senior Russian negotiator said on Monday that Saudi Arabia and Russia are close to agreeing on a deal aimed at reducing production. A deal was agreed to curb a global oil glut, while sources in Moscow said Russia was ready to slash production ahead of talks this week.
The three-year-old OPEC+ production-cut alliance formed by OPEC and other producers including Russia to support oil prices collapsed in March when lockdown measures to limit the spread of the epidemic severely hit demand.
Riyadh and Moscow blame each other for the collapse of their alliance and have launched a battle for market share that has sent oil prices plunging to their lowest in 20 years. It will severely damage the budgets of oil-producing countries and deal a huge blow to the U.S. shale oil industry, which is unable to compete at low prices.
Kirill Dmitriev, one of Moscow’s top oil negotiators and CEO of the Russian Direct Investment Fund, said on Monday, “I think the entire market understands that this agreement is important and it It will significantly stabilize the market, bring vital stability to the market, and we are very close to an agreement.”
Dmitriev was the first person last month to publicly declare the need to expand the scope of the supply agreement He has said that the agreement may require the participation of oil-producing countries outside the OPEC+ group.
Two Russian sources said on Monday that Russia is preparing to significantly cut production to support the weak oil market, but did not give the exact scale of the reduction.
At the same time, Kremlin spokesman Dmitry Peskov said earlier on Monday that Russia is ready to cooperate with other oil exporters.
Russian production in early April was slightly lower than the average production in March
In fact, Russia is already preparing for Taking action to reduce production, for Russia, which basically failed to achieve its production reduction target in 2019, this move highlights the economic impact of the continued decline in oil prices on the country.
Russian oil production on the first day of April was above the March average, an industry source said on Monday.Reaching a stable period, it will continue to put pressure on the global economy in the short term.
According to statistics, the latest data shows that the cumulative number of confirmed cases worldwide is 1.27 million, which just exceeded 1 million just three days ago; the number of deaths increased by 17,000 in these three days to 70,395.
British Prime Minister Johnson was moved to intensive care on Monday after his coronavirus symptoms worsened, but his Downing Street office said he remained conscious. British Foreign Secretary Raab said that while Prime Minister Johnson is receiving treatment in intensive care, the government will continue to ensure that its anti-epidemic plan is implemented. Raab said he had been asked to step in for Johnson “where necessary”.
Affected by the epidemic. Former Federal Reserve Chairman Yellen said that U.S. economic data may reach levels not seen since the Great Depression, and GDP in the second quarter may shrink by at least 30% at an annual rate. A V-shaped economic recovery is the best-case scenario, but there are concerns that the actual outcome will be worse. Agence France-Presse reports that the French Finance Minister predicts that the economy will suffer the worst recession since World War II.
Analysts at Fitch Solutions said falling demand and rising supply could lead to an oil glut of more than 20 million barrels per day, which would put the oil market under “extreme pressure.” Even if oil-producing countries reach the goal of reducing production by 10 million barrels per day or even 15 million barrels per day, they may not be able to offset the impact of declining demand.
Lipow Oil Associates President Andy Lipow said that with the deep forward premium between the April futures contract and the May contract when the April futures contract expires, Cushing inventories are expected to increase significantly in the next few weeks, and Cushing will At full capacity over the next four to six weeks, Cushing prices will be under pressure as producers try to move crude output from Cushing to the Texas Gulf. </p
