Crude oil trading reminder: Russia promised to fulfill its energy contractual obligations, supply concerns are excessive, and oil prices may fall back to $100 / barrel

U.S. oil is now trading at $107.05 a barrel during the Asian session on Friday (March 11); oil prices fell more than 3 percent on Thursday, Russia pledged to meet its energy contract obligations, some traders said concerns about supply disruptions were excessive, and U.S. inflation reached a new 40-year high, raising concerns that a spike in oil prices could lead to earlier disruption to demand.

Intraday highlights: Preliminary U.S. University of Michigan Consumer Confidence Index for March, U.S. Total Rigs Drilled for the Week Ended March 11 at 2:00 a.m. on Saturday, and Weekly Positions Report by the U.S. Commodity Futures Trading Commission (CFTC) at 4:30 a.m. on Saturday.

Negative factors affecting oil prices

【Russia commits to fulfill its obligations under energy contracts】

Russian President Vladimir Putin said at a government meeting on Thursday that Russia would fully meet its energy obligations within and outside Europe. In a video of the speech broadcast by state-run television Station Rossiya24TV, he said that "we will meet all the needs of major buyers, we have to do this, the price is going up, but that is not our fault".

John Kidduff, a partner at AgainCapital, said, "I think some of the 'war anxiety' is fading from the market," "We didn't hit $130 twice this week, and people started asking if the supply problem was really that bad and Russia was still well supplied."

【OPEC+ is actively maintaining the balance of the oil market】

Iraq's oil ministry said in a statement on Thursday that Iraqi Oil Minister Ihsan Abdul Jabbar and OPEC Secretary-General Barkin both agreed that OPEC and the OPEC+ coalition of allies are actively balancing supply and demand to ensure market stability. The statement added that the two officials met on the sidelines of an industry event in Houston where they discussed the development of the oil market at the time of the war in Ukraine.

[Russia can find enough energy buyers even if sanctioned]

Russian Foreign Minister Sergei Lavrov said on Thursday that russia has enough oil and gas buyers despite sanctions imposed on Russia by Western countries and their allies. Lavrov said at a news conference on Thursday after meeting with Ukrainian Foreign Minister Kureba that "we will not persuade anyone to buy our oil and gas, if they want to replace Russian products with something else, please help yourself, we have a market to supply, we already have".

As the largest buyer of Russian energy, Europe is considering the possibility of a gas supply disruption in Europe if the Russo-Ukrainian war continues. About 30 percent of the continent's consumption of natural gas depends on imports from Russia, and it is currently trying to reduce its dependence on Russia by increasing new supplies, improving energy efficiency and using more renewable energy sources.

[Russian Deputy Prime Minister discusses energy cooperation with Indian oil minister]

According to a statement from the Russian government, Russian Deputy Prime Minister Alexander Novak met with Indian Oil Minister Hardeep Puri. Energy cooperation was discussed during the call. "Our relationship enjoys the status of a privileged strategic partner," Novak said, adding that India continues to work with Rosneft to acquire LNG under an agreement with Gazprom; the two sides are developing partnerships for the Sakhalin 1 and Arctic LNG 2 projects.

Russia believes it will increase crude oil and fuel exports to India in the future, as well as the prospect of establishing a partnership at India's Kudankulam nuclear power plant.

[U.S. technology stocks lead the decline in large-cap inflation concerns heat up and the War between Russia and Ukraine shows no signs of easing]

U.S. stocks fell, U.S. consumer prices accelerated for the sixth straight month in February, and Russia's military strike on Ukraine showed no signs of easing. The S&P 500 closed lower, though recovering significantly from intraday lows; technology stocks led the decline, with inflation concerns leading the decline in U.S. Treasuries falling across the board, with the 10-year yield rising to its highest level since Feb. 25 and the 30-year yield rising to a 10-month high.

The U.S. Consumer Price Index (CPI) surged 7.9 percent year-on-year in February, with inflation at its highest level in 40 years and market volatility since Russia's invasion of Ukraine, with U.S. stocks experiencing their biggest gains and losses since 2020 this week.

Mike Loewengart, managing director of investment strategies at Morgan Stanley E*Trade, said, "The market may have digested the high inflation data, the focus has shifted to the War between Russia and Ukraine and the downstream impact of the rise in commodities, investors should be prepared for the turbulent market, to stay sane, not emotional." ”

Oanda senior market analyst Ed Moya said oil prices "began to move slightly lower as investors began to worry that the risk of stagflation could have a significant impact on the short-term outlook for crude oil demand, the latest inflation report shows that everything has become more expensive, and the war in Ukraine could allow the price rally to continue into the summer, which could lead to a disruption to crude oil demand." ”

Bullish factors affecting oil prices

[The First Personal Negotiation Between the Russian and Ukrainian Foreign Ministers Since the Beginning of the War Ended Without Results]

Ukrainian Foreign Minister Haleba said on Thursday after about 90 minutes of talks between Turkey and Russian Foreign Minister Sergei Lavrov that russia said it would continue its offensive until the target was reached. "The overall signal he sent to me was that they would continue to invade until Ukraine met their demands, at least surrender," Kureba said. ”

[Putin may not have any will to cease war]

After no progress in the Talks between the Russian and Ukrainian foreign ministers, Estonian Prime Minister Kaja Kallas said Russian President Vladimir Putin and his government had no will to end the war. Kallas said in an interview with Bloomberg Television in Paris on Thursday, "They want to do as much damage as possible, and if the analogy of playing poker is used, Putin has already bet all the chips on his hand, so he will either win or lose." It is each of our responsibilities to ensure that Putin is not allowed to win this war. ”

As one of the three Baltic states, Estonia is both a member of the European Union and a MEMBER of NATO. Estonia has been one of the most critical critics of Russia and its invasion. Kallas said that while the U.S. has blocked Russian oil imports, the EU is unlikely to follow up on the energy ban.

[Crude oil prices under the Russian oil embargo may see $150 / barrel in the next quarter]

Investment bank Morgan Stanley released a Chinese stock strategy report pointed out that it is expected that the price of crude oil in the second quarter of this year may see $150 / barrel. Morgan Stanley believes that the geopolitical tensions between Russia and Ukraine have brought a risk premium to oil prices, which has a greater impact than market tightness, and the bank predicts that crude oil prices in the second quarter of this year will be basically at $110 per barrel and $125 in the bull market, but it has not yet reflected the impact of the ban on Russian oil imports in Europe and the United States; in the case of major disruptions in crude oil circulation, more than $150 / barrel is possible.

The bank pointed out that the all-time high of crude oil prices was $147/b in 2008, adjusted for inflation, equivalent to $182/b today. The U.S. House of Representatives voted by a majority vote Thursday to ban the import of Russian oil and other energy products in a bid to sanction Russia's invasion of Ukraine.

[Iranian Foreign Minister Says U.S. New Excessive Demands Obstruct Vienna Talks]

On the 10th local time, Iranian Foreign Minister Abdullahyan said in a telephone conversation with the EU High Representative for Foreign Affairs and Security Policy Borelli that the United States has recently made some excessive demands for the Vienna negotiations, which has hindered the process of the Vienna negotiations. Abdullahyan said some of the new U.S. demands were not logically justified and ran counter to the U.S. position of quickly reaching a resumption of compliance with the Iran nuclear deal. The main topics in the Vienna negotiations and the effective lifting of sanctions against Iraq should not be affected by the excessive demands of the United States. Some of the U.S. demands include refusing to remove Iran's Islamic Revolutionary Guard Corps from a "terror list" designated by the U.S. government.

【US inflation hit a 40-year high in February】

Amid rising costs of gasoline, food and housing, U.S. consumer price growth rose to a 40-year high in February, and inflation will rise further as the Russo-Ukrainian war continues. The U.S. Labor Department's data released Thursday showed that the consumer price index (CPI) rose 7.9 percent year-over-year in February and 7.5 percent in January. The February CPI rose 0.8% month-on-month due to rising costs of gasoline, food and housing. Both figures are in line with the median economists' expectations. Core CPI, excluding food and energy prices, rose 0.5% m/m and 6.4% yoY.

The data report shows that even before the Russo-Ukrainian war triggered a surge in commodity prices, inflation in the United States had taken root in the economy, and retail gasoline prices had reached the highest level in history. Most economists had expected annual inflation to peak in February, but the outbreak of the Russo-Ukrainian war means higher inflation figures in the coming months.

Michael Gapen, Barclays' chief U.S. economist, said, "Inflation is unlikely to fall in a few months, and we need to look at how long this conflict will last and how damaging the sanctions are." "In response to rising inflationary pressures, the Fed is expected to raise interest rates for the first time since 2018 next week. But the geopolitical situation has created more uncertainty about the rate-hiking cycle in the coming year.

Fed officials may take a more hawkish stance if energy price shocks cause inflation to remain high, but if the war burns on, falling consumer confidence and real wages will begin to weigh on growth, and the Fed may take a more cautious stance.

Overall, despite the failure of the Russian and Ukrainian foreign ministers' talks, Russia continues to fulfill its energy contract obligations and cool down concerns about the shortage of crude oil supply; OPEC+ also said that it is committed to balancing oil prices, and the short-term upward momentum of oil prices may be suspended or returned to the 100 mark; near the weekend, the general geopolitical situation related news is frequent, vigilant and concerned.

This article originated from Huitong Network