Market News Crude oil trading reminder: The relaxation of US crude oil restrictions on Venezuela drags down oil prices, and is wary of EU sanctions on Russia
Crude oil trading reminder: The relaxation of US crude oil restrictions on Venezuela drags down oil prices, and is wary of EU sanctions on Russia
During the Asian session on May 18, U.S. oil hovered at $114/barrel; oil prices once refreshed a new high of 115.56 since March 9 and then fell back on Tuesday. It is reported that the United States will relax some restrictions on the Venezuelan government, and Venezuelan crude oil supply Or increased expectations drag down oil prices, and oil prices may be short-term or volatile.
2022-05-18
7527
During the Asian session on Wednesday (May 18), U.S. oil hovered at $114 per barrel; oil prices once refreshed a new high of 115.56 since March 9 and then fell back on Tuesday. It is reported that the United States will relax some restrictions on the Venezuelan government. Expectations of an increase in Venezuelan crude supplies dragged down oil prices.
During the day, the focus will be on EIA data, and at 4:00 on Thursday, the Federal Reserve Harker will speak on the economic outlook.
【Supplies from Venezuela may increase】
The U.S. government will authorize U.S. oil company Chevron to hold talks with Venezuelan President Nicolas Maduro's government as soon as Tuesday local time, temporarily lifting a ban on such talks, the sources said.
West Texas Intermediate crude futures settled below $113 a barrel on Tuesday. A U.S. official told reporters that the Biden administration would adjust its sanctions policy to facilitate dialogue with Venezuela.
Crude oil futures extended losses at the end of regular trading hours after Federal Reserve Chairman Jerome Powell said he would not hesitate to raise interest rates above neutral if necessary.
Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said the plan to ease some sanctions on Venezuela "should be seen as a positive development, but should not be mistaken for an immediate relief to the supply strain we are experiencing."
Oil prices fell further after U.S. Federal Reserve Chairman Jerome Powell said there could be some economic pain amid lowering inflation. He said the U.S. Federal Reserve would "continue to push" monetary policy to tighten until inflation fell significantly. "Some of those comments have cooled buying enthusiasm for oil," said Phil Flynn, an analyst at Price Futures Group.
[U.S. homebuilder confidence index falls by the most since April 2020]
A gauge of U.S. homebuilder confidence this month posted its biggest drop since the outbreak of the pandemic, as businesses face higher material costs and slowing demand.
The National Association of Home Builders/Wells Fargo index fell 8 points to 69 in May, the biggest drop since April 2020, data showed on Tuesday. The index has fallen for five straight months and is at its lowest level since June 2020. Only one economist surveyed by Bloomberg had forecasts that were lower than the actual figures. Measures of current purchases, expected sales and potential buyer traffic all deteriorated significantly from a month ago.
"The housing market is facing increasing challenges," NAHB chief economist Robert Dietz said in a statement. "With mortgage rates rising rapidly, first-time homebuyers are particularly affected." NAHB's current sales indicator fell 8 points , to 78, while the potential buyer flow indicator fell 9 points to 52, its lowest level since summer 2020. Sales expectations for the next six months slipped 10 points to 63.
[South Korea first detected cases of new subtypes BA.4 and BA.5 of Omicron strains]
On the 17th local time, according to Yonhap News Agency, citing news from the South Korean health department, South Korea detected new subtypes BA.4 and BA.5 of the new coronavirus Omicron strain for the first time, and the number of BA.2.12.1 infections has reached 19. example.
[4 new cases of monkeypox in the UK]
The UK Health Security Agency said on the 16th local time that four more cases of monkeypox were reported in the UK, three in London and one in northeast England. The UK Health Security Agency said the new cases were not linked to the three previously confirmed cases, and it was investigating whether there was a link between the new cases.
[U.S. crude oil inventories unexpectedly fell by 2.4 million barrels last week]
U.S. crude and gasoline inventories both fell last week, data from the American Petroleum Institute (API) said on Tuesday. Crude inventories fell by 2.4 million barrels in the week to May 13, gasoline inventories plummeted by 5.1 million barrels, and distillate inventories rose by 1.1 million barrels.
According to OPEC+, Russia’s crude oil production in April plummeted by nearly 9%, and production in April was 1.28 million barrels per day below the required level. OPEC+’s April production cut compliance rate rose to 220% from 157% in March.
Gasoline retail prices in all U.S. states rose above $4 a gallon for the first time in history, with the last "fallen" states of Kansas, Oklahoma and Georgia overnight, according to the American Automobile Association (AAA) rise between. California has the most expensive gas, with an average of $6.021 per gallon, a record high, and five other states have prices above $5. With less than two weeks until the peak summer driving season begins, rising gas prices are a burden for consumers and a potential challenge for U.S. President Joe Biden.
EU foreign ministers on Monday unsuccessfully pressured Hungary to drop its opposition to a proposed oil embargo. But some diplomats pointed to an agreement on a phased embargo on Russian oil at the May 30-31 summit.
[Sanctions on Russian oil, the EU can embargo and tariffs together]
U.S. Treasury Secretary Janet Yellen said on Tuesday that the European Union could impose import tariffs on Russian oil, in conjunction with a phased oil embargo currently being attempted to reduce Russia's energy revenue.
U.S. Treasury officials told reporters that the concept of tariffs will be presented at a meeting of G7 finance ministers this week as a cheaper and faster economic way to cut Moscow's oil revenues. The tariff plan is designed to keep more Russian oil on the global market, limit price spikes caused by a blanket embargo, and limit Russia's revenue from exports, the officials said.
The European Commission has proposed an embargo on Russian crude that would be phased in from next year in response to Russia's war in Ukraine, but some Eastern European countries that rely heavily on Russian oil oppose the plan.
Yellen said she discussed a range of options to reduce Europe's energy dependence on Russia with European Commission President von der Leyen in Brussels on Tuesday, adding that tariffs and embargoes "are two things that can be combined, we are not trying to Tell them what is best for them, but we discussed some things that are being considered."
Yellen added that she supports any plan the EU's 27 member states may agree on, but "it is critical that they reduce their reliance on Russian oil." She also assured the United States will help meet the EU's energy needs, including Efforts to increase global oil and gas supply.
With Russian oil selling below global benchmark prices, the tariffs could be set at a level that would cover some of the difference and reduce Russia’s profits, Treasury officials said. But they added that tariffs need to be low enough to make Russia profitable enough to have an incentive to keep exporting. Keeping Russian oil on the market could avoid further price increases that could result from a European oil embargo, the officials said. A surge in oil prices would offset the impact of the embargo on Russian income.
Many governments have a strong desire to stop buying Russian oil as soon as possible, but the stakes are high, and a complete embargo could push prices significantly higher, the officials said. The U.S. Treasury Department is studying price mechanisms, including tariffs, to help protect the global economy from further damage from high energy prices, they said.
Revenue from the tariffs could go to Ukraine's recovery and reconstruction fund, fulfilling a desire that Russia should pay at least part of the cost of large-scale reconstruction efforts.
Yellen said the U.S. is committed to helping meet Europe's energy needs, including working with partners to increase liquefied natural gas (LNG) exports to Europe.
[Russia-Ukraine negotiations have been suspended]
Adviser to the Chief of the Office of the President of Ukraine and member of the Russian-Ukrainian negotiating delegation Podoljak said on the 17th that the negotiation process with Russia has been suspended.
[US retail sales data in April exceeded expectations]
The monthly rate of retail sales in the United States in April was actually 0.90%, compared with the expected 0.8%, and the previous value was 0.5%; the annual rate of retail sales in the United States in April was actually 8.19%, compared with the previous value of 6.9%. The monthly rate of core retail sales in the United States in April was actually 0.60%, expected 0.3%, and the previous value was 1.1%. US retail sales in April recorded a monthly rate of 0.9%, the highest since January this year.
A rise in U.S. auto sales in April offset a drop in fuel prices, and restaurant traffic continued to improve. Sales in other categories, however, may not be as rosy, as higher prices squeeze consumer purchasing power, resulting in only a small increase in sales in these categories, but overall retail sales figures are still higher than pre-pandemic levels.
[US stocks closed sharply higher, boosted by strong retail data]
U.S. stocks ended sharply higher on Tuesday, with the S&P 500 climbing 2.02 percent, boosted by Apple, Tesla and other growth giants, as strong April retail sales data eased concerns about slowing economic growth. Ten of the S&P's 11 major sector indexes rose, with financials, materials, consumer discretionary and technology all gaining more than 2 percent.
Investors were cheered by data showing U.S. retail sales rose 0.9% in April as consumers bought cars as supplies improved and frequented restaurants.
Microsoft, Apple, Tesla and Amazon, which have been selling off recently, rose between 2% and 5.1%, pushing the S&P 500 and Nasdaq higher.
Stocks rallied across the board on Tuesday after a weeks-long sell-off in U.S. stocks that last week saw the S&P 500 fall to its lowest level since March 2021. Sylvia Jablonski, chief investment officer at Defiance ETF, said, "The giants that investors tend to buy have basically tumbled, either into correction territory or into a bear market, and I think investors are looking for opportunities to buy the dip, I guess. Today is a good time to do so."
The S&P 500 bank index jumped 3.8 percent, with Citigroup jumping nearly 8 percent after Buffett's Berkshire Hathaway disclosed it had invested nearly $3 billion in the U.S. bank. A separate set of economic data showed industrial production rose 1.1% last month, beating expectations for a 0.5% rise and up from 0.9% in March. "This is consistent with continued economic growth in the second quarter rather than a recession on the horizon," said Bill Adams, chief economist at Comerica Bank.
Federal Reserve Chairman Jerome Powell said at an event on Tuesday that the central bank will "continue to push" to tighten monetary policy until inflation falls significantly. Traders are pricing in an 85% chance of a 50 basis point rate hike in June.
In general, the escalation of geopolitical tensions caused by the conflict between Russia and Ukraine, and the further escalation of EU sanctions on Russia, the oil price maintains a bullish tone; however, due to the relaxation of restrictions on Venezuelan crude oil by the United States, oil prices may fluctuate to bear in the short-term.
At 7:00 GMT+8, U.S. crude oil is now at $114.17 per barrel.
During the day, the focus will be on EIA data, and at 4:00 on Thursday, the Federal Reserve Harker will speak on the economic outlook.
Negative factors affecting oil prices
【Supplies from Venezuela may increase】
The U.S. government will authorize U.S. oil company Chevron to hold talks with Venezuelan President Nicolas Maduro's government as soon as Tuesday local time, temporarily lifting a ban on such talks, the sources said.
West Texas Intermediate crude futures settled below $113 a barrel on Tuesday. A U.S. official told reporters that the Biden administration would adjust its sanctions policy to facilitate dialogue with Venezuela.
Crude oil futures extended losses at the end of regular trading hours after Federal Reserve Chairman Jerome Powell said he would not hesitate to raise interest rates above neutral if necessary.
Rebecca Babin, senior energy trader at CIBC Private Wealth Management, said the plan to ease some sanctions on Venezuela "should be seen as a positive development, but should not be mistaken for an immediate relief to the supply strain we are experiencing."
Oil prices fell further after U.S. Federal Reserve Chairman Jerome Powell said there could be some economic pain amid lowering inflation. He said the U.S. Federal Reserve would "continue to push" monetary policy to tighten until inflation fell significantly. "Some of those comments have cooled buying enthusiasm for oil," said Phil Flynn, an analyst at Price Futures Group.
[U.S. homebuilder confidence index falls by the most since April 2020]
A gauge of U.S. homebuilder confidence this month posted its biggest drop since the outbreak of the pandemic, as businesses face higher material costs and slowing demand.
The National Association of Home Builders/Wells Fargo index fell 8 points to 69 in May, the biggest drop since April 2020, data showed on Tuesday. The index has fallen for five straight months and is at its lowest level since June 2020. Only one economist surveyed by Bloomberg had forecasts that were lower than the actual figures. Measures of current purchases, expected sales and potential buyer traffic all deteriorated significantly from a month ago.
"The housing market is facing increasing challenges," NAHB chief economist Robert Dietz said in a statement. "With mortgage rates rising rapidly, first-time homebuyers are particularly affected." NAHB's current sales indicator fell 8 points , to 78, while the potential buyer flow indicator fell 9 points to 52, its lowest level since summer 2020. Sales expectations for the next six months slipped 10 points to 63.
[South Korea first detected cases of new subtypes BA.4 and BA.5 of Omicron strains]
On the 17th local time, according to Yonhap News Agency, citing news from the South Korean health department, South Korea detected new subtypes BA.4 and BA.5 of the new coronavirus Omicron strain for the first time, and the number of BA.2.12.1 infections has reached 19. example.
[4 new cases of monkeypox in the UK]
The UK Health Security Agency said on the 16th local time that four more cases of monkeypox were reported in the UK, three in London and one in northeast England. The UK Health Security Agency said the new cases were not linked to the three previously confirmed cases, and it was investigating whether there was a link between the new cases.
Bullish factors affecting oil prices
[U.S. crude oil inventories unexpectedly fell by 2.4 million barrels last week]
U.S. crude and gasoline inventories both fell last week, data from the American Petroleum Institute (API) said on Tuesday. Crude inventories fell by 2.4 million barrels in the week to May 13, gasoline inventories plummeted by 5.1 million barrels, and distillate inventories rose by 1.1 million barrels.
According to OPEC+, Russia’s crude oil production in April plummeted by nearly 9%, and production in April was 1.28 million barrels per day below the required level. OPEC+’s April production cut compliance rate rose to 220% from 157% in March.
Gasoline retail prices in all U.S. states rose above $4 a gallon for the first time in history, with the last "fallen" states of Kansas, Oklahoma and Georgia overnight, according to the American Automobile Association (AAA) rise between. California has the most expensive gas, with an average of $6.021 per gallon, a record high, and five other states have prices above $5. With less than two weeks until the peak summer driving season begins, rising gas prices are a burden for consumers and a potential challenge for U.S. President Joe Biden.
EU foreign ministers on Monday unsuccessfully pressured Hungary to drop its opposition to a proposed oil embargo. But some diplomats pointed to an agreement on a phased embargo on Russian oil at the May 30-31 summit.
[Sanctions on Russian oil, the EU can embargo and tariffs together]
U.S. Treasury Secretary Janet Yellen said on Tuesday that the European Union could impose import tariffs on Russian oil, in conjunction with a phased oil embargo currently being attempted to reduce Russia's energy revenue.
U.S. Treasury officials told reporters that the concept of tariffs will be presented at a meeting of G7 finance ministers this week as a cheaper and faster economic way to cut Moscow's oil revenues. The tariff plan is designed to keep more Russian oil on the global market, limit price spikes caused by a blanket embargo, and limit Russia's revenue from exports, the officials said.
The European Commission has proposed an embargo on Russian crude that would be phased in from next year in response to Russia's war in Ukraine, but some Eastern European countries that rely heavily on Russian oil oppose the plan.
Yellen said she discussed a range of options to reduce Europe's energy dependence on Russia with European Commission President von der Leyen in Brussels on Tuesday, adding that tariffs and embargoes "are two things that can be combined, we are not trying to Tell them what is best for them, but we discussed some things that are being considered."
Yellen added that she supports any plan the EU's 27 member states may agree on, but "it is critical that they reduce their reliance on Russian oil." She also assured the United States will help meet the EU's energy needs, including Efforts to increase global oil and gas supply.
With Russian oil selling below global benchmark prices, the tariffs could be set at a level that would cover some of the difference and reduce Russia’s profits, Treasury officials said. But they added that tariffs need to be low enough to make Russia profitable enough to have an incentive to keep exporting. Keeping Russian oil on the market could avoid further price increases that could result from a European oil embargo, the officials said. A surge in oil prices would offset the impact of the embargo on Russian income.
Many governments have a strong desire to stop buying Russian oil as soon as possible, but the stakes are high, and a complete embargo could push prices significantly higher, the officials said. The U.S. Treasury Department is studying price mechanisms, including tariffs, to help protect the global economy from further damage from high energy prices, they said.
Revenue from the tariffs could go to Ukraine's recovery and reconstruction fund, fulfilling a desire that Russia should pay at least part of the cost of large-scale reconstruction efforts.
Yellen said the U.S. is committed to helping meet Europe's energy needs, including working with partners to increase liquefied natural gas (LNG) exports to Europe.
[Russia-Ukraine negotiations have been suspended]
Adviser to the Chief of the Office of the President of Ukraine and member of the Russian-Ukrainian negotiating delegation Podoljak said on the 17th that the negotiation process with Russia has been suspended.
[US retail sales data in April exceeded expectations]
The monthly rate of retail sales in the United States in April was actually 0.90%, compared with the expected 0.8%, and the previous value was 0.5%; the annual rate of retail sales in the United States in April was actually 8.19%, compared with the previous value of 6.9%. The monthly rate of core retail sales in the United States in April was actually 0.60%, expected 0.3%, and the previous value was 1.1%. US retail sales in April recorded a monthly rate of 0.9%, the highest since January this year.
A rise in U.S. auto sales in April offset a drop in fuel prices, and restaurant traffic continued to improve. Sales in other categories, however, may not be as rosy, as higher prices squeeze consumer purchasing power, resulting in only a small increase in sales in these categories, but overall retail sales figures are still higher than pre-pandemic levels.
[US stocks closed sharply higher, boosted by strong retail data]
U.S. stocks ended sharply higher on Tuesday, with the S&P 500 climbing 2.02 percent, boosted by Apple, Tesla and other growth giants, as strong April retail sales data eased concerns about slowing economic growth. Ten of the S&P's 11 major sector indexes rose, with financials, materials, consumer discretionary and technology all gaining more than 2 percent.
Investors were cheered by data showing U.S. retail sales rose 0.9% in April as consumers bought cars as supplies improved and frequented restaurants.
Microsoft, Apple, Tesla and Amazon, which have been selling off recently, rose between 2% and 5.1%, pushing the S&P 500 and Nasdaq higher.
Stocks rallied across the board on Tuesday after a weeks-long sell-off in U.S. stocks that last week saw the S&P 500 fall to its lowest level since March 2021. Sylvia Jablonski, chief investment officer at Defiance ETF, said, "The giants that investors tend to buy have basically tumbled, either into correction territory or into a bear market, and I think investors are looking for opportunities to buy the dip, I guess. Today is a good time to do so."
The S&P 500 bank index jumped 3.8 percent, with Citigroup jumping nearly 8 percent after Buffett's Berkshire Hathaway disclosed it had invested nearly $3 billion in the U.S. bank. A separate set of economic data showed industrial production rose 1.1% last month, beating expectations for a 0.5% rise and up from 0.9% in March. "This is consistent with continued economic growth in the second quarter rather than a recession on the horizon," said Bill Adams, chief economist at Comerica Bank.
Federal Reserve Chairman Jerome Powell said at an event on Tuesday that the central bank will "continue to push" to tighten monetary policy until inflation falls significantly. Traders are pricing in an 85% chance of a 50 basis point rate hike in June.
In general, the escalation of geopolitical tensions caused by the conflict between Russia and Ukraine, and the further escalation of EU sanctions on Russia, the oil price maintains a bullish tone; however, due to the relaxation of restrictions on Venezuelan crude oil by the United States, oil prices may fluctuate to bear in the short-term.
At 7:00 GMT+8, U.S. crude oil is now at $114.17 per barrel.
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