Crude oil trading reminder: U.S. hurricanes continue, inventory declines exceed expectations, and oil prices continue to rise, pointing to the 75 mark?
During the Asian session on September 16, U.S. crude oil hovered around 72.59. Oil prices rose on Wednesday. U.S. crude oil futures rose 3.1%. Brent crude oil closed above US$75 per barrel for the first time since July. Previous industry data showed that global The decline in crude oil inventories in the largest oil consumer in the United States is greater than expected, and with the expansion of the scope of vaccination, it is expected that oil demand will recover. The momentum of short-term rise in oil prices remains unabated.

During the Asian session on Thursday (September 16), U.S. crude oil hovered around 72.59. Oil prices rose on Wednesday. U.S. crude oil futures surged 3.1%, hitting a new high of nearly one and a half months. Brent crude oil closed at a barrel for the first time since July. Above 75 US dollars, previous industry data showed that crude oil inventories in the world's largest oil consumer, the United States, fell more than expected, and with the expansion of the scope of vaccination, it is expected that oil demand will recover.
During the day, we will focus on the number of initial claims for unemployment benefits in the United States as of September 11, and the number of initial claims for unemployment benefits in the United States as of September 11.
Bullish factors affecting oil prices
[S&P 500 index hits the biggest increase since August]
The U.S. stock market posted its biggest gain in the past three weeks, and investors' concerns about slowing economic growth have eased. Energy stocks pushed the S&P 500 index up 0.9%, closing above the previous closing level for the second time in eight trading days, and the Nasdaq 100 index rising for the first time in more than a week.
Sebastien Galy, senior macro strategist at Nordea Investment, said, "Now is the time for North America to start re-allocating stocks."
Data compiled by Frank Cappelleri at Instinet LLC shows that on Tuesday, the total volume of all exchanges exceeded 10 billion shares for the third consecutive trading day, the longest duration since mid-June.
[US crude oil inventories fell by 6.4 million barrels to the lowest in two years]
The U.S. Energy Information Administration (EIA) said on Wednesday that U.S. crude oil and fuel inventories fell sharply last week, as the U.S. Gulf of Mexico refineries and offshore oil facilities were still recovering from the attack of Hurricane Ida at the end of August.
As of the week of September 10, crude oil inventories fell by 6.4 million barrels to 417.4 million barrels. A Reuters survey estimated a decrease of 3.5 million barrels. Refining activities rebounded from the previous week, but the overall increase was not large because various facilities are still in the process of restarting. The decline in offshore oil production inhibited crude oil production, and crude oil production rose slightly to 10.1 million barrels per day.
Matthew Smith, Head of Commodity Research at ClipperData, said, "Last week's sluggish crude oil production and the downturn in refinery operations still offset each other, and both barely increased because the U.S. Gulf of Mexico is difficult to recover from the impact of Hurricane Ida."
Despite the disruption, crude oil inventories have dropped to their lowest level since September 2019. Continued strong demand helped reduce crude oil inventories and pushed up oil prices. EIA said the refinery's daily output rose by 85,000 barrels last week. Refinery capacity utilization rose by 0.2 percentage points to 82.1% of total capacity, even though capacity utilization in the Gulf of Mexico fell again. Hurricane Nicholas made landfall in Texas on Monday, and the area has been stagnant for part of the week.
US gasoline inventories fell by 1.9 million barrels last week to 218.1 million barrels, the lowest level since November 2019. US East Coast gasoline inventories fell to their lowest level since November 2017.
Distillate stocks, including diesel and heating oil, fell by 1.7 million barrels last week to 131.9 million barrels, which is expected to decrease by 1.6 million barrels.
Morgan Stanley said the decline in oil inventories indicates that the market is tighter than expected. This may indicate that the lack of supply in the market is more serious than expected. Since supply data tends to be more accurate, this means that demand estimates have risen. U.S. shale oil production is expected to increase next year, but the growth rate is not as good as the 2016-2018 level. Coupled with the lower capital expenditures of non-OPEC countries, OPEC should be able to balance the oil market next year. It is estimated that the price of Brent crude oil in 2022 will be around US$75/barrel.
[Nearly one-third of U.S. Gulf of Mexico crude oil production capacity is still closed]
More than two weeks after Hurricane Ida landed in Louisiana, oil companies in the Gulf of Mexico are still working to restore production, and almost one-third of their production capacity remains closed.
According to the US Federal Agency for Security and Environmental Enforcement, as of Wednesday, 36 of the 560 platforms are still closed, affecting approximately 500,000 barrels per day. This exceeds the daily output of Venezuela, a founding member of OPEC. Since the hurricane hit, the overall production loss has risen to 27.3 million barrels, making Aida the hurricane with the greatest impact on oil production in 13 years.
Supply shortages have brought greater difficulties to refineries. They need sufficient supplies to produce heating oil before the cold season and to produce diesel to meet farmers’ demand during the harvest period. Fuel producers are using inventories. According to the US Energy Information Administration, national crude oil inventories have fallen to their lowest level since September 2019.
Matt Sallee, who helped manage approximately US$8 billion in assets at Tortoise, said, “There is not a lot of new crude oil supply, so the market feels very tight.” “This will keep crude oil prices going up. Concerns about the impact of the epidemic on demand are temporarily relegated to second place.”
Edward Moya, senior analyst at OANDA, said: "The impact of Hurricane Ida is much greater than many people expected. It may be difficult to recover production in the Gulf of Mexico before the heavy rain brought by tropical storm Nicholas ends."
Moya said that the biggest question is what the next wave will look like, but people are increasingly optimistic that as more countries get vaccines, every next wave of epidemics will be less severe. "The oil market is still in a state of shortage, and the supply interruption in the United States should be able to support oil prices in the short term."
Negative factors affecting oil prices
[U.S. manufacturing output growth in August was lower than expected]
The US manufacturing output growth rate in August was lower than expected, as Hurricane Idar added to the shortage of raw materials and labor that manufacturers are already facing.
Data released by the Federal Reserve on Wednesday showed that manufacturing output rose 0.2% in August, and the growth rate was revised up to 1.6% in July. Overall industrial production, including mining and utility output, rose 0.4% in August.
The Federal Reserve estimates that Hurricane Ida will have a 0.2% negative impact on manufacturing output. The median forecast by economists in the previous Bloomberg survey showed that manufacturing output is expected to increase by 0.4%, and industrial output is expected to increase by 0.5%.
Although strong consumer demand, steady business investment and inventory decline have supported demand, the limited number of factory employees and the chaotic supply chain have restricted the completion of new orders. Looking ahead, the alleviation of these restrictions should support further production growth.
Job vacancies in the manufacturing sector are at a record high, while the prices of products purchased by factories have soared.
However, the processing volume of crude oil in major Asian countries declined in August, and the daily processing volume hit the lowest level since May last year. In August, the increase in the value added of the industrial enterprises above designated size slowed down, limiting the increase in oil prices.
[U.S. Covid-19 diagnoses exceed 41.51 million, 1 out of 500 people die of Covid-19]
As of 6 pm Eastern Time on September 15, 2021, a total of 41,511,254 confirmed cases of new coronary pneumonia and 666,300 deaths have been reported across the United States. CNN reported that the new crown epidemic in the United States has reached a "serious milestone." One out of every 500 Americans will die of new crown pneumonia. The results of the 2020 U.S. Census show that the population of the United States is 331 million. As of the 15th, the cumulative number of deaths from new coronary pneumonia in the United States has exceeded 666,000, accounting for 0.2% of the total population of the United States.
Generally speaking, due to the impact of the hurricane, US crude oil inventories have decreased more than expected, helping oil prices to rise for the fourth consecutive day this week; part of the crude oil production still has not recovered under the influence of hurricane "Ida", superimposed on the damage caused by the re-attack of "Nicholas" Under the influence, the momentum of short-term rise in oil prices remains unabated. In addition, the slowdown in market concerns about the epidemic has also helped oil prices. But it is also necessary to pay attention to the impact of economic data on short-term fluctuations in oil prices.
At 8:08 GMT+8, US crude oil is now quoted at US$72.50/barrel.
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