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Market News Crude oil trading reminder: non-agricultural strikes in August! Optimism boosts oil price rebound, wary of mutated strain "Mu"

Crude oil trading reminder: non-agricultural strikes in August! Optimism boosts oil price rebound, wary of mutated strain "Mu"

During the Asian session on September 3, U.S. crude oil hovered around 69.72. Oil prices rose by more than 2% on Thursday. New York crude oil futures closed at around $70 a barrel for the first time in nearly a month. Investors bet that the market can absorb the additional supply of OPEC+. Because the U.S. Gulf of Mexico has just been hit by Hurricane Ida; although Hurricane Ida has left, nearly 94% of the crude oil production capacity in the Gulf of Mexico is still closed. The weaker U.S. dollar also supports oil prices and is affected by the rebound in optimism about global economic growth. . Investors pay attention to the evening non-agricultural data.

Eden
2021-09-03
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During the Asian session on Friday (September 3), U.S. crude oil hovered around 69.72, and oil prices rose over 2% on Thursday. New York crude oil futures closed at around $70 a barrel for the first time in nearly a month. Investors bet that the market can digest OPEC+ The additional supply of oil in the U.S. Gulf has just been hit by Hurricane Ida. Although Hurricane Ida has left, nearly 94% of the crude oil production capacity in the Gulf of Mexico is still closed. Emotions drive rebound effects.

In the days, we will focus on China’s August Caixin Service Industry PMI, the US’s August non-agricultural employment data, the US’s August ISM non-manufacturing PMI, and Saturday’s 1:00 release of the total number of US drilling rigs for the week ended September 3.



Bullish factors affecting oil prices


[S&P 500 Index hits a record high on the eve of non-agricultural release]

The US stock market closed higher on Thursday, with the S&P 500 index hitting a record high. US non-agricultural employment data will be released on Friday, which will affect the market's bets on the interest rate path and the Federal Reserve's bond purchase plan. Energy and industrial stocks were among the top gainers, while technology stocks underperformed.

US non-agricultural employment is expected to increase by 725,000 in August, which is smaller than the previous two months, but stronger than at the beginning of this year; Atlanta Fed President Raphael Bostic said, “We will keep the economy running until we see signs of inflation.”

Senator Joe Manchin, a key moderate Democrat, said the Democrats should "suspend" the $3.5 trillion tax and spending plan. He said that soaring inflation, coupled with the uncertainty of national security after the U.S. withdrawal from Afghanistan, means that it is necessary to slow down and possibly reconsider the plan.

Matt Weller, head of global research at Forex.com and City Index, wrote in a client report, “Most market observers expect the Federal Reserve to announce the reduction plan until the November meeting at the earliest. This means that after the release of three non-agricultural employment data from now on "Nevertheless, traders will still pay attention to Friday's employment report to observe whether the labor market is recovering as expected."

Goldman Sachs strategist Zach Pandl said that the market’s concerns about economic growth are a bit too much, thus opening the door to potential short-term rises in cyclical assets. Worry, and our expectations of the Fed are still more dovish than the market," "Therefore, we believe that cyclical assets may rebound further in the short term, that is, stock and bond yields will rise."

[The number of people applying for unemployment benefits for the first time in the U.S. dropped to a new low since the outbreak last week]

As the economy recovers, the number of first-time jobless claims in the United States last week fell to the lowest level since the outbreak. Data released by the Labor Department on Thursday showed that in the week ending August 28, the number of people applying for regular state unemployment benefits for the first time fell by 14,000 to 340,000. Economists surveyed by Bloomberg expected 345,000. As of the week of August 21, the number of continuous applications for unemployment benefits fell to 2.7 million.



Thanks to a broader economic restart and rising demand for labor, the number of people claiming unemployment benefits for the first time has been declining for several months. Even so, compared with the level before the outbreak, the number of people applying for unemployment benefits is still high. The rapidly spreading delta variant has injected uncertainty into the economic outlook, and there is still a risk of layoffs in the future.

The recent rebound in the epidemic has begun to affect consumer behavior. High-frequency data shows weak demand from service industries such as air travel, restaurants and hotels. Looking ahead, as children across the country return to school, the fall labor market may be affected, especially in areas with low vaccination rates.

[OPEC's oil production increased last month, but some member states have not kept up]

After the production cut during the epidemic, the Organization of Petroleum Exporting Countries (OPEC) continued to increase production last month, but some member states have difficulty keeping up.



According to a survey conducted by Bloomberg, OPEC has increased production by 290,000 barrels per day, slightly exceeding the pre-set production increase roadmap. Saudi Arabia and Iraq are the main forces for increasing production.

However, OPEC's production is about 10% lower than the overall quota, and some member states, especially Angola and Nigeria, have deteriorated production capacity and have technical problems.

The survey showed that the average production of 13 OPEC member countries in August was 27.11 million barrels per day. Saudi Arabia increased production by 200,000 barrels/day to 9.63 million barrels/day, and Iraq increased its production by 110,000 barrels/day to 4.08 million barrels/day. Both countries are basically in line with new and higher goals. The survey is based on ship tracking data, official information, and estimates from consulting companies such as Rystad Energy AS and JBC Energy GmbH.

In addition, US Secretary of Energy Jennifer Granholm authorized the use of strategic oil reserves to exchange with ExxonMobil’s refinery in Louisiana. Bjornar Tonhaugen, head of oil marketing at Rystad Energy, wrote in a report that the OPEC+ meeting was calm. After the end, oil prices rose, as the decline in crude oil inventories boosted market confidence, he added that the weakness of the US dollar also made commodities more attractive to investors.

[The White House announced that it has allocated US$2.7 billion to increase vaccine production]

US President Biden’s epidemic response team said on Thursday that the US government will allocate US$2.7 billion to expand vaccine production, but it is not clear which companies will receive funding. The funds will be used to increase the raw materials and materials needed for vaccine production.

The White House Coordinator of Outbreak Response, Jeff Zients, said at a press conference on Thursday that the United States has donated 130 million doses of vaccine to other countries; Biden has pledged to donate more than 600 million doses by the middle of 2022.

Negative factors affecting oil prices


[The Colombian Ministry of Health confirms that the mutant strain of the new coronavirus "Mu" is a native mutant strain found in the country]

On September 2, local time, the Colombian Ministry of Health confirmed that the mutant strain of the new coronavirus "Mu" (B.1.621) was a native mutant strain found in the country. The earliest patients infected with this strain can be traced back to January this year.

The World Health Organization announced that it is monitoring the spread of the mutant strain "Mu" of the new coronavirus. The latest monitoring data show that the "Mu" mutant strain has a series of mutations, indicating that it has the potential of immune escape (vaccine resistance), so further research on its characteristics is needed to better formulate an epidemic prevention plan.

At present, the United States, Japan, and some countries in Europe and Latin America have reported cases of infection with the "Mu" mutant strain.

The WHO said that although surveillance shows that the global prevalence of the "Mu" variant strain has declined, it is still on the rise in Colombia and its neighboring Ecuador.

[Tokyo Paralympics has the first player to be hospitalized due to new coronary pneumonia]

According to Kyodo News, the Tokyo Olympic Organizing Committee announced on the 2nd that a foreign Paralympic athlete was hospitalized on the evening of August 31 due to contracting the new crown virus. This is the first time a contestant has been hospitalized, including the Olympics.

The Japanese Ground Self-Defense Force announced on the 2nd that between August 23 and September 1, 135 self-defense members in Otsu, Shiga Prefecture, Japan had been diagnosed with new coronary pneumonia. FNN said, "This is a large-scale mass infection incident."



On the whole, due to the favorable factors of the previously announced decline in inventory data, coupled with the expansion of the new crown vaccine production in the United States, and the optimism of economic data, the optimistic expectations of economic recovery have been raised, and oil prices have risen. Investors in the day are paying attention to the evening non-agricultural data. In addition, the related news of the mutant strain "Mu" also needs attention.

At 8:08 GMT+8, US crude oil is currently quoted at US$69.65/barrel.

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