Federal Reserve Chairman Jerome Powell will testify before the House Financial Services Committee on Tuesday alongside U.S. Treasury Secretary Steven Mnuchin. The Fed released a transcript of Powell’s speech Monday afternoon. “We have entered an important new phase, earlier than expected,” Powell wrote in prepared speeches. While it is welcome to see a rebound in economic activity, it also presents new challenges, not least the need to control the epidemic. .” Powell emphasized the importance of containing the new coronavirus epidemic, and he reiterated not to withdraw any form of stimulus measures prematurely.
International oil prices closed sharply higher on Monday, reversing the decline during the Asian trading session. WTI crude oil futures August contract closed up 3.14% at US$39.70/barrel; Brent crude oil futures August contract closed up 1.68% at US$41.71/barrel. The number of confirmed cases of COVID-19 worldwide has exceeded 10 million, increasing the possibility of re-implementing lockdown measures in some parts of the world to curb the spread of the virus. At the same time, energy demand has recovered, supporting oil prices.
The three major U.S. stock indexes closed higher across the board. The Dow Jones Industrial Average closed up 2.3% on Monday at 25,595.80 points; the S&P 500 rose 1.5% at 3,053.24 points; and the Nasdaq Composite Index rose 1.2% at 9,874.15 points.
The domestic futures market was obviously divided in the daily session on Monday. As of Monday afternoon’s close, the energy and chemical sector and the black sector had fallen sharply, with fuel oil falling by more than 5%, LU and crude oil falling by more than 4%; iron ore and coke falling by more than 3%; agricultural products were divided, with beans rising by 3%, palm oil, and White sugar fell by more than 3%, and soybean oil fell by nearly 3%; nonferrous metals generally rose, with Shanghai lead, Shanghai copper, and Shanghai aluminum rising by more than 1%.
International oil prices rebounded “deep V”
International oil prices rose sharply on Monday It closed higher, reversing losses during Asian trading hours. WTI crude oil futures August contract closed up 3.14% at US$39.70/barrel; Brent crude oil futures August contract closed up 1.68% at US$41.71/barrel. The number of confirmed cases of COVID-19 worldwide has exceeded 10 million, increasing the possibility of re-implementing lockdown measures in some parts of the world to curb the spread of the virus. At the same time, energy demand has recovered, supporting oil prices.
There is a surge of bad news during the Dragon Boat Festival holiday, and domestic trading on the first trading day after the holiday Crude oil and fuel oil jumped short and opened lower, covering their losses sharply. The recent recurrence and intensification of overseas epidemics may drag down the pace of global economic recovery, and the resumption of trade frictions between Europe and the United States has once again heightened market concerns about the prospects for the global economy and crude oil demand. In addition, U.S. crude oil production rebounded for the first time in three months, which may undermine OPEC+’s efforts to balance the oil market. This downward shift in oil prices also faces the dual risks of weak demand and a shift in supply to loosening.
Li Yanjie, an energy and chemical analyst at CITIC Futures, told a reporter from Futures Daily that the risk of the epidemic is still severe, and the re-implementation of partial blockade measures by various countries may suppress oil demand. The cumulative number of confirmed cases of COVID-19 in the world currently exceeds 10 million. Although new cases are slowing down in Europe, the number of new confirmed cases in a single day in the United States has hit a record high for five consecutive days, leading some states to suspend or postpone their restart plans. In addition, the recent re-emergence of the epidemic in China, New Zealand and Australia has led the government to resume restrictive measures in some areas. It has also warned that the risk of the epidemic has not been completely eliminated and may come back if prevention and control is not effective.
It is understood that the early return of WTI crude oil to the US$40/barrel mark caused some shale oil producers to resume production capacity. In the week ending June 26, the number of active oil drilling rigs in the United States decreased by one from the previous month, setting another record low. However, in the week ending June 19, U.S. domestic crude oil production increased by 500,000 barrels month-on-month to 11 million barrels per day, ending 11 consecutive weeks of decline and marking the first rebound in the past three months. Over the next one to two weeks, the number of active rigs is likely to rebound as production picks up.
“Regarding inventories, gasoline inventories recorded decreases for two consecutive weeks last week, but in terms of crack spreads, the crack spreads of WTI crude oil and gasoline did not improve, and the oscillation fell back to US$10/ barrels, the cracking spread of heating oil is still at a historically low level, and sluggish refining profits will continue to suppress the enthusiasm of refineries to start operations and drag down the destocking process of crude oil. At the same time, EIA crude oil inventories, which have hit record highs for three consecutive weeks, also show that Supply and demand are still relatively loose,” Li Yanjie said.
Li Yanjie believes that due to the current many risk factors, the recent direction of oil prices mainly depends on the epidemic situation. We do not rule out the possibility that prices will continue to fall as the epidemic worsens, but if it is brought under control, the oil market may be able to stop falling and rebound with the support of OPEC+’s firm commitment to production cuts. However, after the recovered oil price hits the US$40/barrel mark, if shale oil companies are caused to resume production, it will increase the risk of supply and demand imbalance. In the future, oil prices are likely to run within a range. On Monday, affected by the sharp drop in international oil prices during the Dragon Boat Festival holiday, the prices of high-sulfur fuel oil (FU) and low-sulfur fuel oil (LU) fell significantly. The performance of LU will mainly follow international oil prices in the future.
Black series high diving
For the big black series on Monday Ma Liang, an iron ore researcher at Guotai Junan Futures, believes that the recent rebound in the global epidemic has intensified the market’s concern about systemic risks.There is an upward trend, with the CSI 300 rising by 6.28%. When the economic outlook is still relatively uncertain, there is no basis for the index to continue to rise. On the whole, it is still dominated by oscillations. After a short period of large fluctuations, After the rise, technical adjustments also need to be made first. But generally speaking, in the absence of major negative events, the index’s downward space is also relatively limited.
In Jia Tingting’s view, on the whole, the stock index is still improving, but the sharp rise brought about by the increase in valuation is not expected for the time being. In the future, with the improvement of the index compilation method, With the modification and the continuous advancement of the registration system, the differentiation between individual stocks will definitely intensify. In terms of operation, you can wait and see in the short term. For long-term investors, you can build a position on dips and increase the allocation of equity. </p
