Crude oil trading reminder: Production in the Gulf of Mexico resumes, stocks rising for the first time in eight weeks dragged down oil prices, pay attention to OPEC+ next week’s meeting
During the Asian session on September 30, oil prices hovered around 74.64. Oil prices fell on Wednesday following the sharp rise of the US dollar. U.S. oil fell 0.6% and fluctuated throughout the day. In addition, production was restored due to the hurricane. The U.S. government report showed crude oil inventories for eight weeks. It has risen for the first time in the coming years; under the influence of a series of negative factors, oil prices may fall in short-term shocks; the market is concerned about OPEC+'s statement at next week's meeting.

During the Asian session on Thursday (September 30), oil prices hovered around 74.64. Crude oil prices fell as the US dollar rose sharply on Wednesday. U.S. oil fell by 0.6% and fluctuated throughout the day. In addition, production resumed by the hurricane, a US government report showed Crude oil inventories rose for the first time in eight weeks.
In the day, we will focus on China's September official manufacturing PMI, China's September Caixin manufacturing PMI, the number of people claiming unemployment benefits for the week as of September 25, the final value of the actual annualized quarterly rate of the second quarter of the United States, and the second quarter of the United States. The final value of the annualized quarterly rate of the quarterly core PCE price index; a number of Fed officials spoke.
Negative factors affecting oil prices
[Technology stocks put pressure on the market, debt ceiling deadlock has become the focus of attention]
The S&P 500 index gave up most of its gains on Wednesday, as the decline in technology stocks offset the impact of defensive sectors such as utilities and consumer staples.
Fed Chairman Powell and the European Central Bank, the Bank of Japan, and the Governors of the Bank of England all expressed cautiously optimistic views on the economy on Wednesday. They believed that the global supply chain interruption that pushed up the inflation rate would not persist. Powell and Lagarde defended inflation and firmly believed Price pressures will not continue to rise. Traders remain vigilant about the US debt ceiling, and beware of the market impact if Congress fails to raise the debt ceiling in time.
Fiona Cincotta, senior financial market analyst at City Index, said, “Worries surrounding high inflation and slowing growth may continue for some time. With less economic data, discussions on the debt ceiling in Washington may become the focus of the market.” The Congressional Budget Office said that the Treasury Department may hit bond issuance restrictions as early as the end of October.
Citi’s survey of institutional clients shows that most investors are worried about persistently high inflation, believing that U.S. stocks are more likely to fall by 20% than they rise by 20%. According to this month’s survey of more than 90 pension funds, mutual funds and hedge funds According to the survey, although most people expect the S&P 500 Index to rise moderately next year, price pressures and the Fed’s policy reversal pose a major risk to the stock index.
[U.S. crude oil inventories unexpectedly increased by 4.6 million barrels last week]
The U.S. Energy Information Administration (EIA) said on Wednesday that U.S. crude, gasoline and distillate stocks rose last week as production resumed after the recent storm.
EIA data shows that as of the week of September 24, US crude oil inventories increased by 4.6 million barrels to 418.5 million barrels. Analysts surveyed by Reuters expected a decrease of 1.7 million barrels. U.S. crude oil production jumped 500,000 barrels per day to 11.1 million barrels per day, which was in line with the level before Hurricane Ida hit the U.S. Gulf of Mexico about a month ago. Analysts believe that weekly production data is not as reliable as monthly data, and the release of monthly data is lagging behind.
Affected by this news, U.S. crude oil prices fell for a while, but then rebounded. Last week, oil refining increased by 68,000 barrels per day. The refinery capacity utilization rate increased by 0.6% to 88.1% of the total capacity.
EIA said US gasoline inventories increased by 193,000 barrels to 221.8 million barrels, and analysts surveyed by Reuters estimated an increase of 1.4 million barrels. In the past four weeks, the supply of gasoline products was 9.2 million barrels per day, about 1% lower than the pre-pandemic level in 2019.
Bob Yawger, head of energy futures at Mizuho Financial Group, said, "The gasoline supply data is quite good," "This data has been bad recently."
EIA data shows that distillate stocks, including diesel and heating oil, increased by 385,000 barrels last week to 129.7 million barrels, down from 1.6 million barrels previously expected. Crude oil inventories in Cushing, Oklahoma, the United States increased by 131,000 barrels last week.
[OPEC+ meeting next week may stick to the existing agreement]
Although oil prices have hit a three-year high above US$80 per barrel, and there is pressure from consumers to increase supply, OPEC+ may stick to the existing agreement when it meets next week and increase production by 400,000 barrels per day in November.
In July, OPEC+, formed by the Organization of the Petroleum Exporting Countries (OPEC) and its allies headed by Russia, agreed to increase production by 400,000 barrels per day per month to gradually end the plan to reduce production by 5.8 million barrels per day. The alliance also agreed to evaluate the agreement in December.
One of the sources said, "So far, we will maintain the plan to increase production by 400,000 barrels per day." OPEC+ holds regular meetings, and the alliance agreed in September to continue the current increase in production plan in October.
The OPEC+ Joint Technical Committee (JTC) met on Wednesday. A presentation seen by Reuters showed that based on its basic scenario assumptions, the oil market is expected to have an oversupply of 1.4 million barrels per day next year, slightly lower than the previous forecast of 1.6 million barrels per day.
In the opening speech of the JTC meeting, OPEC Secretary-General Barkin said that the current OPEC+ agreement will help maintain the balance of the oil market.
According to OPEC’s Twitter account, Barkin said, “From our standpoint today, OPEC and non-OPEC ministers have decided to start adding 400,000 barrels per day to the market every month, and continue to help balance the need to gradually increase production to meet demand. At the same time prevent potential oversupply."
JTC predicts that assuming a demand growth of about 6 million barrels per day, there will be a gap of 1.1 million barrels per day in the global oil market this year; JTC assumes that next year’s demand growth will be 4.2 million barrels per day. OPEC+ ministers will hold an online meeting next Monday and will consider JTC's evaluation results before making a final decision.
Bullish factors affecting oil prices
[U.S. second-hand housing contract volume rebounded to a seven-month high in August]
A measure of U.S. second-hand housing contracting volume rebounded to a seven-month high in August, as potential buyers welcomed more attractive prices and more inventory.
According to data released by the National Association of Realtors on Wednesday, the second-hand housing contract volume index increased by 8.1% from the previous month to 119.5, the first increase in three months. Economists surveyed by Bloomberg expected a median increase of 1.4%.
The above data shows that the housing market activity is strengthening, after it has fallen from last year's record high. Historically low loan interest rates, slower house price growth and increased housing prices may reinvigorate demand that has weakened this year.
Lawrence Yun, chief economist of the National Association of Real Estate Brokers, said in a statement that “increased inventory and easing price conditions are driving buyers back to the market.” “However, buyers’ ability to pay is still facing challenges, because house prices rise roughly by wages. Triple the increase."
On the whole, a stronger U.S. dollar will reduce its attractiveness to crude oil exports. Crude oil production affected by the hurricane has resumed, and the sharp increase in crude oil inventories has dragged down oil prices; under the influence of a series of negative factors, oil prices may fall in short-term shocks; market concerns OPEC+'s statement at next week's meeting.
GMT+8 08:16, U.S. crude oil is now quoted at $74.84/barrel.
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