The financial sector opened in the morning on May 10, and domestic futures were green in a large area. The main contracts of SC crude oil, Shanghai tin and soda ash fell by more than 5%, iron ore, Shanghai nickel and fuel oil fell by more than 4%, and glass fell by nearly 4%. In terms of gains, hogs rose nearly 1%.
Super Alert is coming! Oil prices plummeted by $8 overnight, why did the retrogrades instigate it?
Perfect trading does not mean that you make money every time, it means that you can run out in the instant of danger. The market reflects everything, the trend is still continuing, then the market will continue, when will this wave of market end? That is, until external forces change this inherent upward trend. Where are the external forces? The sign of the end of the market is, find the important pressure, after finding it, it is not to run to this place, when the level is broken, the trend changes, and you run out.
The oil price correction is not surprising, but the overnight plunge of $8 is obviously not a simple correction, which has loosened the previous bullish view. In Monday's report, we made it very clear that in the context of the current weakening of commodities, especially industrial integration, oil prices are resistant to falling, but it is difficult to become a retrograde.
On Monday daytime, especially in the morning, domestic SC crude oil and bitumen (4161, -191.00, -4.39%) fuel oil and other specially stronger than other industrial products seem to challenge this judgment, such a performance on the one hand is the domestic refinery low start of the background of funds in the context of fully tapping the recovery demand expectations after the epidemic, the weakness of other industrial products will also be part of the bulls dare to go to the oil sector to warm up, in addition to the recent continuous weakening of the renminbi is also to make the performance of renminbi-denominated commodities stronger than the dollar-denominated foreign market, So SC crude oil on Monday intraday also once refreshed the April high, but the tail end of the day still gave back most of the day's gains have begun to have a certain decline.
The real shock occurred in the night session, international oil prices fell by $8 in one go, the current global recession concerns continue to rise, in order to control inflation pressure In Europe and the United States developed countries withdraw liquidity from the market, risk assets out of favor have been continuously sold, global stock markets, commodities continue to decline as a whole, macro clouds shroud the market, which has become the biggest risk point in the current market. In addition, the blow to market sentiment is the previous appetite of investors in the EU's ban on Russian oil is temporarily shelved due to the opposition of member states, Hungary stressed that before its concerns are resolved, Hungary can not accept the new round of sanctions proposed by the EU to Russia, and finally failed to pass the current sanctions plan, which hit the previous optimistic speculation expectations, in fact, it is not only crude oil that plummets, europe is more inseparable From the natural gas market has plummeted for 2 consecutive days, and the cumulative decline in US natural gas is more than 20%. Energy markets are losing money following a rapid cooling of global risk assets.
In addition, the political game around the Russo-Ukrainian war has also intensified, which may affect the economic level of the game, and then pry the fluctuations of financial markets, and the Russian military found a number of documents during the special operation in Ukraine to prove that Ukraine had a detailed plan to attack Russia. White House press secretary Jane Psaki said Biden was unhappy with intelligence leaks about Russia, and U.S. President Joe Biden recently warned national security officials that information about what kind of intelligence the United States shares with Ukraine should not be made public and that such leaks must be stopped. After the White House denied providing Ukraine with direct intelligence "intended to kill the Russian general," Biden spoke separately with Defense Secretary Lloyd Austin, CIA Director William Burns, and National Intelligence Director Avril Haynes, respectively.
In general, the geopolitical speculation of crude oil itself is still the market concern of the supply and demand of the two ends of the influencing factors swaying, but there is no pressure to exceed expectations, so at this stage the oil price itself downward drive is not enough, but this does not mean that oil prices will not appear large level adjustment, especially in the context of systemic panic in market sentiment or need to pay attention to related risks, which is also our key emphasis, before the market sentiment is not stable, oil prices will have the opportunity to test the 100 integer mark and the support near the lower edge of the range. Pay attention to rhythmic grasping.
[1] WTI main crude oil futures closed down $6.68, or 6.09%, at $103.09/barrel; Brent's main crude oil futures closed down $6.45, or 5.74%, at $105.94/barrel; INE crude oil futures closed down 5.35% at $667.1.
[2] The US dollar index rose 0.06% to 103.73; the Hong Kong Stock Exchange fell 0% to 6.733 US dollar/yuan; the US 10-year Treasury rose 0.69% to 118.47; and the Dow Jones Industrial Index fell 1.99% to 32245.7.
Recent news
[1] The Fed's Financial Stability Report warns about deteriorating market liquidity;
The Fed's semi-annual Financial Stability Report warns that liquidity conditions in major financial markets have deteriorated due to rising risks from the Russo-Ukrainian war, monetary tightening and high inflation. According to some indicators, liquidity in the new US spot Treasury market and stock index futures market has declined since late 2021. While the recent deterioration in liquidity has not been as extreme as in some past periods, the risk of a sudden sharp deterioration appears to be higher than normal;
In addition, since Russia's invasion of Ukraine, liquidity in the oil futures market has been somewhat strained, while some of the other affected commodity markets have experienced significant dysfunction. High inflation and rising interest rates in the United States could have a broader negative impact on domestic economic activity, asset prices, credit quality, and financial conditions. The report also warns of U.S. home prices, where high valuations make them particularly sensitive to shocks;
Fed Governor Brainard said in a press release accompanying the report that the war "triggered price fluctuations and margin call notifications in commodity markets, and highlighted potential avenues for large financial institutions to be contagious." "The Fed is working with domestic and foreign regulators to better understand the exposure of commodity market participants and their links to the core financial system
The dollar hit another nearly two-decade high, fueled by interest rate hikes in the United States, the Russo-Ukrainian war and asian containment; the dollar index rose nearly 9 percent this year, up for the fifth consecutive week last week. During the uneasy Asian session, the dollar once again refreshed friday's near-20-year high.
Worrying inflation and economic outlook US stocks plunged across the board to hit a 13-month low;
The S&P 500 fell 3.2 percent to a 3,991.24, a 13-month low, and the Nasdaq composite fell 4.3 percent to a new low since December 2020 at 11,623.25. Investors are concerned about the Fed's ability to contain inflation while avoiding a recession, and the market has suffered a widespread sell-off. Supply chain disruptions pose a serious threat to continued inflation, raising concerns among investors about the limitations of Fed policy;
The market plunge also spread to the strongest performing sector in 2022 – energy producers. The sector fell more than 8 percent as crude oil prices moved lower. Big tech stocks weren't immune, with Tesla, Amazon and Nvidia all down at least 5 percent. The Cboe Volatility Index surged to its two-month high;
Traders will be watching the speeches of many central bankers this week after Fed Chairman Jerome Powell downplayed the possibility of a 75 basis point rate hike last Wednesday. Economic data was subdued this week, with Wednesday's April consumer price index report being the focus; the data is expected to decline both year-on-year and month-on-month, partly reflecting a pullback in gasoline prices;
High inflation data, a slowdown, and a massive tightening of monetary policy by the Federal Reserve to curb price spikes have all weighed on risk appetite and valuations. Goldman Sachs strategists say that even if the recession is avoided, the outlook for the U.S. stock market is not very bright. Volatility will remain high until the inflation path is clear. With tighter financial conditions and poor market liquidity, it is difficult to expect a rise similar to that of the end of March in the short term
[2] The European Union shelved plans to ban the import of Russian crude oil;
According to the Financial Times, the EU shelved plans to ban imports of Russian crude oil due to a failure to reach an agreement with key partners on the imposition of sanctions. However, the European Commission still intends to prohibit European companies from providing insurance for tankers carrying Russian oil in order to limit Russia's crude oil transportation capacity. European Commission President von der Leyen traveled to Budapest on Monday to discuss a phased ban on Russian crude. According to sources, the idea of banning the import of crude oil, lobbied vigorously by Malta and Greece, has now been shelved. During the talks, member states raised the issue that an effective ban should involve other countries such as the United States and the United Kingdom, especially the United States exerting influence over countries such as Liberia, the Marshall Islands and Panama. The EU's sanctions talks come as Russia's maritime crude oil exports have been largely flat in the last week;
Russia continues to export seaborne crude oil as EU countries argue over sanctions against Russia and consider banning the purchase of Russian crude oil and making it more difficult to transport it to other countries. For seven days as of May 6, Russian crude oil exports were essentially flat compared to the previous week, but the volume of crude exports from its western ports to Asia fell sharply;
Ship tracking data and data reported by the Port Authority show that a total of 34 tankers loaded about 24.9 million barrels of crude oil from Russian export terminals. The average daily seaborne crude oil volume was 3.56 million barrels, down about 2 percent from a revised 3.62 million barrels per day for the week ended April 29;
The Russo-Ukrainian War continued, and although export volumes stabilized, Moscow's export tax revenues fell before the Victory Day celebrations. The EU is about to impose sanctions on Russian oil, but hungary's opposition still needs to be changed. At current crude oil export tax rates, a week's worth of exports could cost the Kremlin about $176 million; $34 million less than the previous week, the lowest in six weeks.
The G7 leaders intend to commit to banning the import of Russian oil
The draft joint statement shows that the G7 leaders will commit to banning the import of Russian oil as a further response to Russia.
They will unveil their commitments after Sunday's video meeting. The content of the declaration is subject to change.
Several G7 member states have pledged to diversify supply sources, with Germany, the EU's largest economy, backing a proposal to ban imports of Russian oil by January.
The leaders will "commit to eliminating our dependence on Russian energy in a phased manner, including phasing out or banning the import of Russian oil," the draft said, "we will ensure that we do it in a timely and orderly manner and provide the world with time to access alternative supplies."
The G7 leaders will also commit to taking steps to ban or otherwise block the provision of critical services to Russia on which it depends. "This will strengthen Russia's isolation in all areas of its economy," the draft said.
[3] Saudi Arabia, the world's largest oil exporter, cut the price of June crude sold to Asia and Europe on Sunday (May 8). Saudi Arabia's lower selling prices also reflects concerns about global oil demand.
Arabian light crude sold to the Far East in June was $4.40 per barrel above the average Oman/Dubai benchmark price, compared to +$9.35 in May, and Arabian light crude sold to Europe in June was +$2.10 per barrel, compared with +$4.60 in May.
But after the European Union proposed a gradual embargo on Russian oil imports, the Group of Seven countries made similar commitments on Sunday. Washington has also imposed new sanctions on Gazprombank executives and other businesses. The move is expected to further push up international oil prices.
According to Refinit data, no vessel has loaded Russian oil for Japan since mid-April. Russia exported about 1.9 million barrels of oil to Japan in April, down 33 percent from the same period last year. But resource-poor Japan relies heavily on Russian fuel, and Japanese Prime Minister Fumio Kishida said on Monday that it would take time to phase out imports of Russian oil.
This article originated from the financial world