With the Federal Reserve Taper expected to temporarily slow down and being disturbed by hurricane factors, international crude oil prices have been generally strong recently. However, as the good news gradually materializes, there is insufficient driving force for oil prices to rise further.
The Federal Reserve slows down the taper pace
The recently released U.S. non-farm employment data for August fell short of expectations. The data only recorded an increase of 235,000, the highest level in 2021. The smallest increase since January this year, well below expectations of 730,000. The number of new non-agricultural jobs in July was revised up from 943,000 to 1.05 million, while the unemployment rate in August was recorded at 5.2%, which was the same as expected. The U.S. non-farm payrolls data is regarded as an important reference indicator for changes in the Federal Reserve’s monetary policy. The August data is significantly different from expectations, leading the market to believe that the pace of the Fed’s taper may slow down.
However, at the previous annual meeting of global central banks in Jackson Hole, the Federal Reserve also did not clarify the specific timetable for Taper. This has weakened the market’s concerns about short-term liquidity tightening, and the U.S. dollar index has also continued to rise. The decline has provided significant support to the trend of crude oil and other commodities. However, as the global economy continues to recover and inflation rises, it is only a matter of time before the Federal Reserve gradually scales back its bond purchases. This also means that overall liquidity will tend to tighten in the future, which will be good for the U.S. dollar and bad for commodities.
Uncertainty on the supply side has been eliminated
In early September, the OPEC+ meeting announced that the previous production increase plan would remain unchanged. From 8 to 12 months, OPEC+ oil-producing countries It will grow steadily at a total rate of 400,000 barrels per day, which further eliminates the uncertainty on the crude oil supply side. The output policies of oil-producing countries are not expected to change significantly before the end of the year, and the overall production will show a steady increase in production. However, the gradual withdrawal from production cuts next year and the increase in production baseline will still put certain pressure on oil market supply.
In addition, due to the deadlock in U.S.-Iran negotiations, the restoration of Iran’s crude oil supply has been delayed, but Iran has stated that it is ready to increase oil production to the highest possible level once the U.S. government’s unilateral sanctions are lifted. , to compensate for the huge losses caused by the unilateral sanctions of the United States. In the first half of this year, Iran’s crude oil production and exports have increased significantly. In July, production reached 2.5 million barrels per day, a new high in the past two years. However, because the export channel has not yet been fully opened, Iran’s supply will still be limited in the future.
Hurricane Ida damaged oil facilities
At the end of August, Hurricane Ida hit the U.S. Gulf region, bringing water, power and oil outages. Destruction of facilities. As of Monday, a total of 99 oil and natural gas production platforms in the U.S. Gulf region are still evacuated, and 83.87% of crude oil production (or 1.53 million barrels per day) is shut down, limiting refinery processing demand. At present, the United States has entered the seasonal consumption off-season, and the demand for terminal refined oil and refinery crude oil processing will decrease, and the inventory side has entered an accumulation cycle. The possibility of another hurricane hitting the U.S. Gulf region cannot be ruled out in the future. Hurricanes combined with seasonal consumption factors will further suppress demand in the U.S. market.
Based on the above analysis, after the short-term benefits are gradually realized, crude oil is facing correction pressure. In the medium term, the general tightening of the monetary level and the weakening of seasonal oil consumption will continue to suppress crude oil prices. </p
