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Market News Crude oil trading reminder: Determined to resist US sanctions! Iran and Venezuela sign a 20-year cooperation agreement, oil prices back below the 120 mark

Crude oil trading reminder: Determined to resist US sanctions! Iran and Venezuela sign a 20-year cooperation agreement, oil prices back below the 120 mark

During the Asian session on June 13, U.S. oil fell by more than 1% and is now at $118.76 per barrel. The main pipeline of Russia to Europe has remained stable, and over the weekend, Iran and Venezuela signed a 20-year cooperation agreement, which involves the energy field and is short. With the help, oil prices are hovering below the 120 mark again; this week, the crude oil market still needs to pay attention to the OPEC monthly report and the IEA monthly report.

2022-06-13
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During the Asian session on Monday (June 13), U.S. oil fell by more than 1%, and is now at $118.76 per barrel. The main Russian pipeline to Europe has remained stable, and Iran and Venezuela signed a 20-year cooperation agreement over the weekend, involving the energy sector. , to help the bears, oil prices are hovering below the 120 mark again.



In the past few days, the focus will be on the cooperation between Iran and Venezuela, and the relevant actions and measures of the United States.

Negative factors affecting oil prices


[Iran and Venezuela sign a 20-year cooperation agreement]

Iran and Venezuela signed a 20-year cooperation agreement on the 11th, covering fields such as energy, petrochemicals, defense and culture. Both countries have world-leading crude oil reserves, but both are subject to U.S. sanctions. The leaders of the two countries said that the two sides will strengthen cooperation and jointly implement some major projects.

Iranian state television reported on the 11th that Iranian President Ibrahim Rahi and visiting Venezuelan President Nicolas Maduro witnessed the signing of a cooperation agreement between the foreign ministers of the two countries in Tehran, the capital of Iran. The agreement mainly covers oil, petrochemicals, defense, agriculture, tourism and culture, as well as repairs to Venezuelan refineries and exports of technical and engineering services.


Leahy told a news conference after the agreement was signed that the agreement showed "the determination of high-level officials from both countries to strengthen bilateral relations in different areas."

Leahy also mentioned U.S. sanctions on Iran and Venezuela. "Venezuela has had a tough few years, but the people, officials and the president of this country are determined to resist sanctions," he said. "This is a good proof to everyone that resistance works and forces the enemy to retreat." He also said that Iran has suffered from the United States. Sanctions and threats have lasted for more than 40 years, but Iran has turned these sanctions into opportunities for national development.

According to CCTV News, on June 11, local time, during Venezuelan President Maduro’s visit to Iran, Iran delivered the second Iranian-made oil tanker to Venezuela. Iranian President Raisi and Venezuelan President Maduro had a video connection with a shipbuilding company in the Persian Gulf in Tehran to witness the delivery of the tanker.

It is understood that the tanker is the second Aframax tanker built by Iran Marine Industries for Venezuela. According to the relevant contract, Iran will deliver two other oil tankers to Venezuela in the future. This type of tanker is 250 meters long, 44 meters wide, 21 meters high, has a water inlet of 14.8 meters, a speed of 15 knots, and can carry 800,000 barrels of oil.


[Strong inflation data dragged down the three major U.S. stock indexes]

The U.S. stock market closed sharply lower on Friday, with the biggest weekly drop since January. The S&P 500 fell 2.91%. U.S. consumer prices rose more-than-expected in May, adding to concerns that the Federal Reserve will raise interest rates more aggressively. .

Technology and growth stocks, whose valuations are more dependent on future cash flow, led losses. Microsoft, Amazon and Apple dragged the S&P 500 down.

The two-year U.S. Treasury yield, which is highly sensitive to rate hikes, surged to 3.057 percent after the inflation report, the highest since June 2008. The benchmark 10-year U.S. Treasury yield hit 3.178%, its highest since May 9.

The U.S. Labor Department report showed that the consumer price index rose 1.0% in May after rising 0.3% in April; the CPI rose 8.6% year-on-year in May, the largest increase since 1981, after rising 8.3% in April.

Stocks have been in choppy trading this year, with the latest sell-off largely related to concerns about inflation, higher interest rates and a possible recession.

"The report should drown out any notion that a 'pause' of rate hikes at the end of the summer is appropriate, and the Fed is clearly still behind the curve in controlling inflation," said Jason Pride, chief investment officer at Glenmede's private wealth practice.

"The worry is that this may be a forward-looking indicator of consumer habits, and even though gasoline demand is strong right now, it's a signal for the future, if gasoline prices don't stabilize," said Phil Flynn, an analyst at Price Futures. Consumers will cut back."

On the U.S. supply side, the U.S. oil rig count, an indicator of future supply, rose by six last week to 580, the highest level since March 2020.

[Russia's main pipeline to Europe remains stable]

Russian gas deliveries to Europe via Nord Stream 1 remained steady on Friday morning local time, while flows eastward from Germany to Poland via the Yamal-Europe pipeline rose, operator data showed. Gazprom said its gas supply to Europe via Ukraine's Suza import was steady at 41.9 million cubic meters, unchanged from the previous day.

Bullish factors affecting oil prices


[Russia-US relations are already in a state of crisis, and bilateral dialogue has entered a dead end]

On the 10th local time, Antonov, the Russian ambassador to the United States, said in an interview with the TASS news agency that the relationship between Russia and the United States has been in a state of crisis, and the bilateral dialogue has entered a dead end. He also pointed out that Russia holds an open position to conduct diplomatic cooperation with all countries, especially in the context of facing many challenges and requiring the international community to act together.

[There are Ukrainian troops blocked in the North Donetsk chemical plant]

Russian Satellite News Agency quoted a Luhansk official as saying on the 11th that about 300 to 400 Ukrainian soldiers were blocked in the "Azot" nitrogen chemical plant in Severo Donetsk.

According to the Luhansk official, in addition to the Ukrainian soldiers, there are more than 500 civilians in the chemical plant, who are hiding in the plant's air-raid shelter.

[The U.S. government will waive the new crown testing requirements before departure for international air passengers]
The U.S. government will waive pre-departure COVID-19 testing requirements for incoming international air travelers, effective Sunday at 12:01 a.m., following heavy lobbying by airlines and the travel industry. The administration will announce that the federal Centers for Disease Control and Prevention will no longer require pre-departure COVID-19 testing for travelers coming to the U.S., as science and data determine this requirement is no longer necessary. The CDC will make a reassessment of the decision within 90 days, officials said.

[Canada temporarily cancels mandatory random sampling of inbound air passengers for new crown virus]

The Canadian government has decided to temporarily cancel mandatory random COVID-19 checks for incoming passengers at all airports from June 11 to 30, in an effort to alleviate widespread delays and detentions that have been going on for some time at some airports.

The Canadian Minister of Transport, Health, Public Safety and Tourism jointly announced the relevant measures on June 10. Unvaccinated travelers are still required to be tested for the virus, however. From July 1, all virus tests will be conducted at the outer venues.

The Canadian official said that it will continue to cooperate with airports, airlines, baggage handling departments and other relevant parties to find solutions to bottlenecks such as security checks and customs clearance, and reduce delays when the summer travel season comes.

[Saudi Arabia cuts crude oil supply to some Asian refineries in July]

Saudi Aramco has notified at least five North Asian refiners that crude supplies in July will be lower than contracted; three other North Asian refiners and one South Asian refiner, several people familiar with the matter said on Thursday. The plant will receive sufficient crude oil as contracted.

European demand for Saudi crude has been climbing. The European Union has begun phasing out purchases of Russian crude, and European buyers are racing to find other sources of supply. "Saudi crude supplies are very tight in the market," said a Singapore-based trader.

North Sea Forties crude traded at a premium of more than $4 to its benchmark on Friday, the highest level since at least 2008.

[Goldman Sachs says energy prices are not rising enough to curb demand]

Energy prices need to climb further before Americans start cutting back, Damien Courvalin, head of energy research and commodities strategist at Goldman Sachs, said in a TV interview on Friday. “Prices are not high enough to dampen demand growth,” with oil prices surging more than 60% this year following Russia’s invasion of Ukraine, with West Texas Intermediate futures at around $120 a barrel. Tight supplies have pushed auto fuel prices to record levels, with the national average for gasoline approaching $5 a gallon and diesel at $5.753 a gallon, according to the American Automobile Association.



Oil demand is growing given that global economic growth remains strong, Courvalin added. And so far, the momentum has shown that consumers are "still more resilient enough to absorb higher oil prices." U.S. gasoline demand rose to its highest level this year despite record oil prices, according to the latest data from the U.S. Energy Information Administration. Even so, demand was down about 1% from a year earlier and nearly 6% from the same period in 2019.



Overall, the cooperation between Iran and Venezuela on energy and other related aspects may increase the supply of Venezuelan crude oil in the market, which will be negative for oil prices; however, when the geopolitical situation is tense, it is also necessary to pay attention to whether the United States has issued a related agreement on the cooperation between the Iranian nuclear issue and Venezuela. Sanctions measures; this week, the crude oil market also needs to pay attention to the OPEC monthly report and the IEA monthly report.

At 8:05 GMT+8, U.S. crude oil is now at $118.76 a barrel.
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