Industrial products are generally down, market sentiment is low, and oil prices are hard to resist against the trend

Aftermarket view

The news is relatively light, most of the time on Monday in the commodity market mood is low, the global epidemic situation has worsened again, the epidemic situation in Europe, South America, East Asia has risen significantly, the domestic multi-regional containment measures have been upgraded, and at the same time, plagued by economic downward pressure, the overall industrial products market is lower, in the context of the sub-background, crude oil has not been able to undertake friday's upward trend of the high fall, but its overall performance is still significantly stronger than other industrial products. During the European session, with the stability of energy supply such as natural gas, the sharp rise in European diesel prices boosted market sentiment, and the overnight oil price once again organized a rebound to recover some of the lost ground, but it was still obviously affected by poor market sentiment.

On the whole, the strong support below the current crude oil price is still limited, but the convergence process of the high point reduction, the lack of clear guidance at the news level, and the existence of large variables, the capital operation is obviously more cautious. This week's U.S. CPI data is the focus of market attention, last month it was this data that triggered a series of follow-up reactions including the Federal Reserve to increase interest rate hikes, the commodity market ushered in a crash, considering that the U.S. gasoline prices have fallen, CPI continues to refresh the pressure to go higher has weakened, after the release of this data is expected that the market will still have a larger reaction. In addition, on July 11, local time, Jack Sullivan, assistant to the US president for national security affairs, announced at the White House briefing on the same day that US President Biden would travel to Israel, the West Bank and Saudi Arabia on the 12th. Sullivan said that this visit is Biden's first visit to the Middle East as president, and whether his meeting with Saudi Arabia can bring some directional guidance to the market is worth paying attention to.

100-110 this area is the stage of long-short stalemate, there need to be enough factors to break the current deadlock, short-term look at the technical oil prices bear a certain pressure, and the overall atmosphere of industrial products is empty, oil prices rush high energy is insufficient, may shock to explore the low support.

Daily updates

[1] WTI's main crude oil futures closed down $0.7, or 0.67%, at $104.09/ barrel; Brent's main crude oil futures closed up $0.08, or 0.07 percent, at $107.1 a barrel; INE crude oil futures closed up 0.06% at 686.4 yuan.

[2] The US dollar index rose 1.24% to 108.22; the Hong Kong Stock Exchange added 0.01% to 6.7045 USD/CNY; the US 10-year Treasury rose 0.49% at 118.33; and the Dow Jones Industrial Index fell 0.52% to 31173.84.

Recent news

[1] The White House expects the US June CPI data to be "high" but "outdated";

The White House expects the consumer price index for June to be "high" as gasoline and food prices rise sharply, but that figure is "outdated" because energy prices have fallen; White House press secretary Karine Jean-Pierre said gasoline and food prices continue to be severely affected by the war in Ukraine. The CPI report scheduled for Wednesday is a "review";

Economists surveyed expect the report to show consumer prices rising 8.8 percent year-on-year in June, another 40-year high after 8.6 percent in May. But Jean-Pierre downplayed the significance of the headline numbers, noting that oil prices have fallen since June. "The June CPI data is outdated as energy prices have fallen sharply this month and are expected to fall further," she said.

The June CPI could be the third month-on-month increase of at least 1% in the past four months. Rising inflation could prompt the Fed to raise rates by 75 basis points at its second consecutive meeting on July 27, also fueling fears of a possible recession.

[2] On the supply side, it is uncertain how long the Caspian Pipeline (CPC) can still transport crude oil from Kazakhstan. So far, the pipeline, which carries 1 percent of the world's oil, is still in operation, and a Russian court has rejected a previous ruling suspending the pipeline' operations. Rebecca Babin, a senior energy trader at CIBC Private Wealth Management, said crude oil was under pressure again as market sentiment remained weak as CONCERNs about THE SUPPLY of THE CPC pipeline eased.

On Tuesday, a Russian court ordered a 30-day suspension of operations at the CPC terminal, through which more than 30 million barrels of crude oil, mainly Kazakh crude, were exported overseas. The court said the injunction was issued because the facility violated an oil spill prevention plan. About two-thirds of CPC crude oil ends up in Europe. Supply in the European market has been constrained by political instability in Libya and the avoidance of Russian oil by russia's former customers. Libya, the North African country, has already halved its exports and is likely to do so further.

[3] [Italian energy company: Russia reduced gas supply by one-third on the 11th] On the 11th local time, the Italian energy company Eni Group issued an announcement that it had received a notice from Gazprom that the company would supply 21 million cubic meters of natural gas to the Italian side on the same day, a third less than the previous average daily supply of 32 million cubic meters. It is also reported that from the 11th, Nord Stream-1, Russia's main pipeline to Europe, will begin annual maintenance. This is the largest single pipeline to transport Russian gas to Germany, delivering 55 billion cubic meters of gas to Germany every year.

Gazprom will cut the pipeline's capacity to just 40 percent, citing delays in returning equipment sent to Canada by Germany's Siemens Energy for overhaul due to sanctions. Canada said over the weekend it would return a repaired turbine, but also said it would expand sanctions on Russia's energy sector.

Europe fears that Russia could extend regular maintenance to further limit European gas supplies, throwing the winter-fill storage program into disarray and exacerbating the gas crisis, leading to emergency measures by the government and exposing consumers to painfully high bills.

Stephen Innes, managing partner of SPI Asset Management, said that if the pipeline fails to resume operations on July 22 as scheduled, it could lead to a disruption to Gas demand in Europe, which will lead to a slowdown in the economy.

This article originated from the Energy R&D Center