Crude oil trading reminder: oil production recovery process is slow + inventory reduction, oil price rebounds and rises, it depends on EIA data to break the 70 mark

During the Asian session on Thursday (September 9), US crude oil hovered around 69.20. API data released in the morning showed that US crude oil inventories decreased, but the decline was lower than expected; oil prices rose more than 1% on Wednesday due to US Gulf oil production The progress of the business in resuming production after Hurricane Ida passed by was slow.

In the day, we will focus on the annual rate of China’s August CPI, the number of initial claims for unemployment benefits in the United States as of September 4, the changes in EIA crude oil inventories in the United States as of September 3, and the Federal Reserve Daley’s speech

Bullish factors affecting oil prices

[The hurricane affects the decline in U.S. crude oil production may be greater than expected]

The U.S. Energy Information Administration said on Wednesday that it expects U.S. crude oil production to decrease by 200,000 barrels per day in 2021 to 11.08 million barrels per day, and pointed out that Hurricane Ida will force production to fall more than the previous forecast of 160,000 barrels per day.

At the end of August, due to the impact of Hurricane Ida, more than 90% of crude oil output in the U.S. Gulf of Mexico was shut down. Many companies are still in the process of resuming normal production. Due to power outages and damage to some facilities, the restart plan is progressing slowly.

The agency said that due to the shutdown, the average daily output of the Gulf of Mexico in August was 1.5 million barrels, a decrease of 300,000 barrels from July.

Production in the Gulf of Mexico is expected to gradually recover in September, with an average daily output of 1.2 million barrels that month and an average of 1.7 million barrels per day in the fourth quarter.

Driven by the growth of shale oil production, US crude oil production is expected to increase to an average of 11.72 million barrels per day in 2022. Compared with the same period last year, the total number of oil and gas rigs has increased by approximately 94%.

The demand in 2022 is expected to increase by 890,000 barrels per day to 20.63 million barrels per day, which is higher than the previous forecast of an increase of 860,000 barrels per day.

According to EIA, on a global scale, global oil and liquid fuel consumption in August is estimated to be 98.4 million barrels per day, an increase of 5.7 million barrels per day from August 2020, but a decrease of 4 million barrels per day from August 2019. .

[Oil production recovery is slow and crude oil inventories decrease]

API data released on Thursday morning showed that crude oil inventories fell by 2.882 million barrels, gasoline inventories fell by 6.414 million barrels, and refined oil fell by 3.748 million barrels. The financial blog Zero Hedge commented on API crude oil inventory data that oil prices rebounded further on Wednesday, and US oil rebounded above US$69 due to the slow recovery process of oil production in the Gulf of Mexico.

The closure of the refinery caused by the hurricane is expected to last for several weeks, and analysts predict that the hurricane "Ada" may reduce the total output of the United States this year by up to 30 million barrels. This week's API inventory data may begin to show part of the impact of Hurricane Ida. The data shows that crude oil inventories have fallen, and the decline is lower than expected. After the data was released, oil prices fluctuated around $69.4.

Another factor supporting oil prices is that Libya’s Es? Sider and Ras? Lanuf ports were blocked by protesters, which blocked oil exports, said a petroleum engineer from these two ports. However, other engineers said that the production of the oil fields that supply the two ports has not been affected.

[Iran warns the International Atomic Energy Agency not to "confront" Iran on the nuclear issue]

According to the official website of the Iranian president, President Leahy said that the confrontation between the UN nuclear supervisory agency and Iran will be "non-constructive" and will not receive a useful response from Iran.

Leahy made the remarks during a call with Charles Michel, President of the European Council, on Wednesday. On September 13th, representatives of various countries at the International Atomic Energy Agency will hold a meeting to decide whether to condemn Iran’s significant increase in nuclear activities in the past year.

[Hurricane "Ada" will expand Russian oil market share in the United States]

Due to the impact of Hurricane Ida, oil production in the U.S. Gulf of Mexico was interrupted, which provided an opportunity for Russia to expand its share of the U.S. oil market.

According to people familiar with the matter, U.S. crude oil imports from the Russian Urals in September and October are expected to increase, because 77% of offshore oil production in the Gulf of Mexico remains closed 10 days after Hurricane Ida landed on the coast of Louisiana. Refineries along the Gulf of Mexico are looking for alternative crude oil supplies when the supply is insufficient. The demand from these refineries will support the rise in the price of similar grade Russian oil in the Gulf of Mexico. So far, hurricanes have reduced oil production by 20.6 million barrels, more than any storm in the past 13 years.

Negative factors affecting oil prices

[Nasdaq 100 index hit the biggest decline in two weeks]

The U.S. stock market fell. Under the influence of economic risk factors such as the spread of delta strains and the reduction of the scale of stimulus by the central bank, investors reassessed market valuations. The Nasdaq 100 Index posted its biggest decline in two weeks. Large stocks such as Apple and Facebook were the top drag on the index. The S&P 500 Index fell for the third consecutive day since closing at a record high on September 2. The Dow Jones Industrial Average Index It has fallen 1.5% from historical highs.

Morgan Stanley and Citigroup's fund managers have turned cautious about US stocks. Many investors are beginning to think that the relative valuation of US stocks is too high, although growth in other regions is affected by the epidemic lockdown and travel restrictions.

Morgan Stanley and Citigroup suspect that even if inflation accelerates due to supply shocks, central banks will reduce stimulus measures. Seasonal factors and valuation concerns at the end of the year exacerbated market pessimism.

Fiona Cincotta, a senior financial market analyst at City Index, said on the phone that “in terms of recovery, the momentum certainly seems to be slowing down.” “We have been hearing that the Fed will tighten monetary policy before, and this has made the market uneasy. And now, the data is indeed slightly weak, and the number of new crown infections is also increasing."
Morgan Stanley downgraded U.S. stocks to underweight this week and downgraded global stocks to equal weights on the grounds that economic growth is facing "significant risks" as of October.

[Fed said the economic growth rate of July-August declined slightly]

The Fed stated in its Beige Book released on Wednesday that economic growth slowed slightly to a moderate level from early July to August. “The slowdown in economic activity was mainly due to the reduction in dining out, travel, and tourism and leisure activities in most regions.”

The Fed stated that, “Looking forward, companies in most regions are still optimistic about the near-term prospects, but widespread concerns about supply disruptions and resource shortages continue.” However, most of the regional Federal Reserve Banks stated that the delta strain caused the spread of the epidemic. This led to a fall in economic activity in the region.

The Federal Reserve Bank of New York said that in New York City, concerns about the delta strain and the federal extension of restrictions on foreign tourists continue to rise, restricting economic activities and leading to the cancellation of summer events.

The Fed said that demand for labor continues to increase, but all regions have mentioned widespread labor shortages, which restrict employment and in many cases hinder business activities. "

[U.S. job vacancies rose to a record high in July]

The number of job vacancies in the United States rose to a record high in July, indicating that labor shortages continue to exist, posing a challenge for companies to meet customer needs.



According to the Job Vacancies and Labor Turnover Survey (JOLTS) released by the US Department of Labor on Wednesday, the number of job vacancies rose to 10.9 million in July and was revised to 10.2 million in June. Economists surveyed by Bloomberg expected a median of 10 million.

Since the number of non-agricultural jobs dropped by millions last year, the rapid recovery in economic activity has led to a serious shortage of employees in many companies. You can see "recruitment" messages posted on the windows of merchants across the United States, and many restaurants have to restrict business hours.

Looking to the future, as worries about the new crown epidemic weaken and schools reopen, the problem of recruitment difficulties will also be eased accordingly. However, the surge in cases related to the delta strain, and its impact on school and workplace safety, may make improvements in job vacancy data come later.

The number of job vacancies in July was 4.3 million more than the number of recruits, the highest level on record since 2000. The number of voluntary turnovers increased to 4 million that month, and the turnover rate was flat at 2.7%, close to a record high.

[New coronavirus cluster infection at a music festival in Japan]

According to news from the Japan Broadcasting Association (NHK) on the 8th local time, a cluster infection of the new crown virus has been confirmed at the outdoor music festival held in Tokoname City, Aichi Prefecture on August 29. On September 8, it was reconfirmed that at least 7 people were infected with the new crown virus after participating in the music festival. In addition to the 18 people diagnosed in Aichi Prefecture as of the 7th, the number of people diagnosed with new crown pneumonia after participating in the music festival reached 25. In addition to the confirmed cases in Aichi Prefecture, Tokyo, Osaka, Shizuoka Prefecture and Gifu Prefecture have also seen new confirmed cases who have participated in related activities.



On the whole, crude oil production caused by Hurricane Ida was interrupted and the recovery process was slow, and it has caused 20.6 million barrels of oil production to be cut; API data released in the morning showed that US crude oil inventories have fallen, which has provided impetus to oil prices and helped oil prices rebound slightly. Intraday oil prices pay attention to the evening EIA data. The current inventory is expected to decrease by 6 million barrels. If the data is worse than expected, oil prices are expected to stand at the 70 mark.

At 8:18 GMT+8, U.S. crude oil is currently quoted at US$69.20 per barrel.