At the beginning of the Asian session on Wednesday (January 19), oil prices continued to rise, with the main US crude oil contract rising to the highest level since October 2014 at $86.31 / barrel, and the February futures contract reaching a maximum of $86.97 / barrel; in the context of strong demand and tight supply, the geopolitical tensions in the Middle East exacerbated supply concerns, in addition, OPEC's optimism about demand in 2022 helped oil prices rise.
Intraday focus will be on US President Biden will hold a press conference, the IEA will release the monthly crude oil market report, US Treasury Secretary Yellen will speak; API data will be released at 5:30 on Thursday.
Bullish factors affecting oil prices
[OPEC expects the crude oil market to be well supported by strong demand]
The Organization of the Petroleum Exporting Countries (OPEC) has maintained a confident outlook that has prompted its continued production increase, and the global oil market is expected to be "well supported" by strong demand this year.
Crude oil prices climbed to their highest levels since 2014 in London and New York on Tuesday, while various disruptions constrained supply, while the recovery in fuel demand was largely untroduced by the spread of the Omicron variant. Brent crude futures broke through $88 a barrel.
The Organization of the Petroleum Exporting Countries said in its monthly report that even if the central bank tightens monetary policy, the market's strength will continue. The group's data shows oil inventories are significantly below the five-year average.
OPEC reiterated last month's forecast that "the impact of The Opichron is expected to be moderate and short-lived." So far, this prediction is correct.
This bullish expectation of oil prices by OPEC's Vienna-based research arm should reassure members when the organization meets early next month.
OPEC and its partners — a 23-nation coalition led by Saudi Arabia and Russia — have been taking a phased back to production they halted during the outbreak.
However, this has actually become a bullish catalyst for the crude oil market, as the alliance has failed to increase supply at the planned pace and some member countries have been unable to increase production as planned due to insufficient investment and turmoil. According to the report, in December 2021, OPEC members increased production by only 166,000 barrels per day, compared with a production increase target of 250,000 barrels. Production in Nigeria has fallen again. OPEC's forecast for global oil demand and supply this year is essentially unchanged from last month's report.
【Damage to oil facilities, supply disruption to boost oil prices】
Traders in Asian markets are paying rising premiums as fears of Omicron's impact on demand wane and a series of supply disruptions from Libya to North America. Meanwhile, drone strikes on UAE oil facilities on Monday raised geopolitical risks.
After launching drone and missile attacks that detonated tanker trucks and killed three people, the Houthis warned that more facilities could be attacked, while the UAE said it would reserve the right to "respond to these terrorist attacks." In addition, an explosion paralyzed a previous major oil pipeline from Iraq to Turkey.
Louise Dickson, senior oil market analyst at Rystad Energy, said: "The damage to the UAE's oil facilities in Abu Dhabi is not serious in itself, but it has sparked the problem of supply disruptions in the region in 2022."
[Germany is ready to use nord stream 2 pipeline as a tool to retaliate against Russia]
German Foreign Minister Annalena Baerbock made it clear during a visit to Moscow that if Russia uses energy as a weapon, Europe will target nord Stream 2 as a counter-Russian target.
Both the United States and Europe have expressed concern about the increased risk of a Russian invasion of Ukraine, and diplomatic efforts appear to have made little progress in the face of the worst security crisis since the outbreak of the Cold War. Baerbock, who has long been critical of nord Stream 2, highlighted the threat when Russian Foreign Minister Sergei Lavrov was at her side.
During his first visit to Moscow as Germany's top energy envoy, Baerbock said that "we have repeatedly stressed at all levels of government that if energy is used as a weapon against other countries, then the Nord Stream 2 pipeline will be affected accordingly".
As Russia increases its military presence on its border with Ukraine, Western countries have been seeking to increase their influence over Russia, and the near-completion Nord Stream 2 gas pipeline offers an opportunity to put pressure on the Kremlin.
Lavrov said politicizing the pipeline would be "counterproductive" and that Nord Stream 2 is a commercial project aimed at securing energy supplies in Germany and the European Union.
But German Chancellor Schoertz said after a meeting with NATO Secretary-General Jens Stoltenberg that the German government would abide by the agreement reached with the United States during the tenure of former Chancellor Angela Merkel that germany would respond once Russia weaponized energy and ensure Ukraine's status as a transit country for gas supplies.
Stoltenberg said on Tuesday that NATO remains ready to discuss with Russia how to reduce the level of the crisis, saying it is "ready to meet again and come up with concrete proposals and written proposals." Germany has said it wants constructive relations with Russia, but Moscow needs to take steps to ease tensions.
[U.S. says Ukraine crisis situation is dangerous, secretary of state will meet with Russian foreign minister]
U.S. Secretary of State Blinken will meet with Russian Foreign Minister Lavrov in Geneva this week. At the same time, the United States has stepped up warnings about Russia's readiness to attack Ukraine.
A U.S. State Department official, speaking on condition of anonymity, said at a news conference Tuesday that Blinken would urge Russia to immediately ease tensions surrounding its border with Ukraine, which has deployed more than 100,000 soldiers and equipment.
White House press secretary Jen Psaki told reporters on Tuesday that "we think the situation is extremely dangerous," and "we are now in a phase where Russia could attack Ukraine at any time." I think it's more obvious than before. ”
Blinken will hold talks with Lavrov in Geneva on Friday. Before that, he will consult with allies in Kiev and Berlin to signal u.S. solidarity with NATO partners. Three days of diplomatic activity last week failed to clarify Russian President Vladimir Putin's intentions. State Department officials said the meeting with Lavrov showed that months of crises could still be resolved through diplomatic channels, but that Russia should reduce its level of military deployment on the border.
Although Russian officials deny allegations that they planned to attack Ukraine, the Kremlin used the crisis as a bargaining chip to demand that NATO pledge not to expand further eastward and restore its military presence to where it was in 1997 before Eastern and Central European countries joined NATO. U.S. and NATO officials rejected the request.
U.S. officials said Tuesday nato was also alarmed by the apparent move of Russian troops into Belarus, which would give it another option to attack Ukraine. The United States and European allies have vowed to impose "massive" sanctions on Russia in the event of an attack, but it is unclear whether their sanctions will be uniform.
Blinken spoke on the phone with Lavrov on Tuesday. U.S. State Department spokeswoman Ned Price said in a statement: "The Secretary of State reaffirms the strong commitment of the United States to the sovereignty and territorial integrity of Ukraine. ”
Ed Moya, senior market analyst at Oanda's Americas operations, said oil prices were already prone to price spikes due to tight supply ahead of the recent wave of good news, and energy traders were ready to push oil prices higher given optimism that the demand outlook would still improve. ”
【Goldman Sachs bullish oil price to $100/barrel】
Goldman Sachs, a well-known investment bank, said that Iranian oil production is not expected to increase until 2023, and the negative impact of Aumicron on global demand outside the Asian powers in January-February is 700,000 barrels per day; global oil demand is expected to average 101 million barrels per day in the first quarter of 2022, falling to 100 million barrels per day in the second quarter and 101.5 million barrels per day in the second half of the year, and the growth rate of OPEC+ production in 2022 is expected to be further below the quota.
Goldman Sachs said that in terms of our latest supply and demand elasticity projections, these long-term market rebalancing factors are expected to raise long-term oil prices to $90 per barrel, and Brent crude spot is expected to reach $96 per barrel in 2022 and $105 per barrel in 2023; the estimated rise of Brent crude oil above $100 per barrel is not based on the idea of oil exhaustion.
Negative factors affecting oil prices
【New York State Manufacturing Index Unexpectedly Plummets to Negative Values】
A new York state manufacturing index fell sharply in January from the previous month, with orders and shipments indicators falling sharply, indicating that the Opichron variant led to a decrease in manufacturing activity.
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Data released tuesday showed the New York Fed's manufacturing index fall sharply to -0.7 from 31.9 a month ago. A lower than zero indicates a contraction in economic activity, and the figure is weaker than all economists who accepted Bloomberg's expectations. The economist's forecast is median at 25. The survey took place between 3 January and 10 January, when COVID-19 infection rates were rising.
The overall manufacturing index saw its 32.6-point decline was the biggest since April 2020. The New Orders indicator fell 32.1 points to -5 in January, and the Shipments indicator fell 26.1 points to 1. One measure of delivery time declined weakly, with indicators of average working weeks and employment indicating a slowdown in growth.
Economists at Oxford Economics said, "The main reason why New York State's manufacturing sector started so weak this year is because the heating of the new crown epidemic and supply chain problems have led to stagnant growth." But strong demand will continue to boost manufacturing activity in the region and across the country. However, supply chain challenges can curb upward mobility, making it difficult for factories to fully keep up with demand levels."
The report also suggests that inflation is poised to remain high as the new year begins. While the current price indicator in the survey has declined, respondents' expectations for inflation in six months' time have climbed to record highs. Overall, New York State manufacturers remain optimistic about the outlook. The indicator reflecting future business conditions remained at 35.1, indicating that orders are expected to accelerate growth.
In addition, the capital expenditure indicator rose to its highest level since 2006 and technology spending improved slightly, indicating that companies plan to significantly increase investment in the coming months.
[U.S. stocks fell sharply across the board, investors worry about the Fed's aggressive interest rate hike]
U.S. stocks fell across the board on Tuesday, U.S. Treasury yields soared and speculation that the Fed would have to raise interest rates earlier than previously expected heated up.
All but one of the 11 sectors in the S&P 500 were lower, with the Dow Jones Industrial Average hitting its biggest decline since November. The tech-stock-dominated Nasdaq 100 fell more than 2.5 percent, dragged down by large-cap stocks such as Apple and Meta Platforms.
Julie Biel, portfolio manager and senior research analyst at Kayne Anderson Rudnick, said the focus of the market's attention was on the Fed's March policy meeting, where the market began to consider the possibility of raising rates by more than 25 basis points, "Higher interest rates will continue to exist and everyone's decisions must take this into account, not just those who borrow capital, but mainly in terms of valuations, so those high-minded concept-driven tech stocks will continue to be hit." ”
Dennis DeBusschere, founder of 22V Research, said the question investors are struggling with most right now is whether the Fed needs to tighten monetary policy to steer inflation lower, or whether slower economic growth will allow central banks to be less aggressive in terms of policy tightening; the former would be "scary" for cyclical and tech stocks. ”
White House says there are still more tools to counter higher oil prices.
The White House said Tuesday that "tools are still on the table" if the administration needs to address rising oil prices that could threaten economic recovery.
Emily Horne, a spokeswoman for the Biden administration's National Security Council, said, "We continue to work with producers and consumers, these measures have a real impact on prices, and ultimately we still have the tools to address the price issue, and we will continue to monitor oil prices in the context of global economic growth and, where appropriate, with OPEC+." ”
Overall, in the context of supply concerns, the recent tensions in the Geopolitical Situation in the Middle East have become the main force driving oil prices up, supply concerns have increased sharply, making bullish sentiment high, intraday attention to the IEA monthly report, coupled with Thursday will release API and EIA data, oil prices this week or will be the sword to $90 / barrel.
This article originated from Huitong Network
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