Last night, the three major U.S. stock indexes fell across the board, with investors worried about the progress of epidemic prevention and control and the prospects for economic restart. As of the close, the Dow Jones Industrial Average fell 457.20 points, or 1.89%, to 23764.78 points. The Nasdaq fell 2.06% to 9002.55 points, ending its sixth consecutive positive streak. The S&P 500 index fell 2.05% to 2870.12 points.
Following the White House in the United States, new confirmed cases of new coronavirus pneumonia also appeared in high-level officials in Russia, further pushing up the The market is worried about the possible second outbreak of the epidemic.
On May 12, Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID) and head of the White House Coronavirus Task Force, warned The U.S. Congress, as the United States attempts to defeat the new coronavirus epidemic, ending the blockade too quickly could have serious consequences, including new outbreaks of the epidemic.
The World Health Organization also issued some relatively optimistic remarks that day, but market concerns remained unabated. Spot gold once again broke through the US$1,700/ounce level that day, reaching a maximum of US$1,711.03 during the day. /ounce.
The U.S. Department of Labor also released U.S. CPI data for April, which showed that the U.S. CPI fell by 0.8% on a monthly basis after seasonally adjustment in April. It was expected to fall by 0.7%, and the previous value fell by 0.4%; Core CPI fell 0.4% on a monthly basis, compared with expectations for a 0.2% fall, and the previous value fell 0.1%. Some commentators believe that the monthly core CPI data recorded the largest decline since the Great Recession, which was mainly dragged down by the sharp drop in demand for services such as gasoline and air travel.
Many Federal Reserve officials expressed their opposition to the negative interest rate policy previously mentioned by US President Trump that day.
Although oil prices reacted violently for a while after Saudi Arabia and many other countries announced additional production cuts, they soon began to fall. The market reaction during the Asian trading time on May 12 was even more muted. But international oil prices rose nearly 7% on Tuesday. As of the close, the price of New York light crude oil futures for delivery in June rose by US$1.64/barrel, or 6.79%, to close at US$25.78/barrel. Brent July crude oil futures closed up $0.35/barrel, or 1.18%, at $29.98/barrel.
Fauci warns: If states cross “checkpoints” and reopen, the epidemic may break out again
Although many countries in Europe and the United States are preparing to gradually relax restrictions and start work on stimulating economic recovery after the epidemic as the epidemic is gradually brought under control recently, China, South Korea, Germany and other early stage The emergence of new confirmed cases and even clusters of infections in countries with better epidemic control has also sounded the alarm for the market. Especially in recent days, in addition to the “fall” of the US White House, the Russian President’s press secretary Peskov has also been diagnosed with the new coronavirus. The market Concerns about a possible resurgence of the epidemic are growing.
On May 12, Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), gave a direct warning when testifying before the Senate Health Committee that people in the White House Reopening the economy before certain “checkpoints” established in the coronavirus recovery plan are met could have serious consequences.
According to reporters, although the World Health Organization (WHO) said that day that some treatment measures seemed to be limiting the severity or duration of COVID-19, Fauci still believed that it was too fast Ending the lockdown could have serious consequences, including a renewed outbreak.
“As I have said publicly many times, we have a guiding framework for how to open up the United States again.” But it depends on the specific region, state, city Or the epidemic dynamics in the region… If some regions cross these barriers and checkpoints and open prematurely without the ability to respond effectively, we will start to see a small peak evolve into a major outbreak of the epidemic. According to CCTV News Client, at the Senate hearing, Fauci also stated that the epidemic has not yet been completely controlled in the United States. Although there are currently signs of easing in some areas, this only means that everything is moving in the right direction and does not mean that the epidemic has been controlled. In his opinion, the epidemic may worsen in the autumn or winter, and the number of deaths from new coronary pneumonia in the United States may be higher than reported.
It is understood that this hearing is the largest congressional hearing since the beginning of the coronavirus crisis, and Fauci and three other senior government health officials attended. In his planned remarks, Fauci stopped short of blaming the Trump administration for its sluggish response to the pandemic, instead highlighting the National Institutes of Health’s (NIH) efforts to develop vaccines and other medical treatments to combat the coronavirus.
At present, the cumulative number of confirmed cases of new coronary pneumonia in the world has exceeded 4.3 million, and the cumulative number of confirmed cases in 10 countries has exceeded 100,000, of which the cumulative number of confirmed cases in the United States is close to 1.4 million.
The negative interest rate policy was opposed by many senior Federal Reserve officials
In addition to the above hearings Outside the meeting, the U.S. Department of Labor also released U.S. CPI data for April that night. Data show that the U.S. CPI fell by 0.8% on a monthly basis after seasonally adjustment in April, and was expected to fall by 0.7%, and the previous value fell by 0.4%; the core CPI fell by 0.4% on a monthly basis, and was expected to fall by 0.2%, and the previous value fell by 0.1%.
The monthly decline in CPI in April was the largest since 2008, and the monthly decline in core CPI was the largest in history. In this regard, some commentators believe that the data recorded the largest decline since the Great Recession, mainly affected by the decline in gasoline and aviation.If it is as low as 3%, the production reduction target can be achieved within 1-2 hours. Referring to its production reduction cooperation in the past two years, Li Wanying believes that Russia will not prioritize permanently shutting down oil wells to reduce production.
In the United States, Li Wanying told reporters that there is no doubt that its production has declined. However, according to EIA data, U.S. crude oil production has only dropped by 1 million in more than two months. —1.2 million barrels per day, far less than the rate of decline in the number of oil wells.
As for Saudi Arabia, although after the OPEC+ meeting, Saudi Arabia changed its attitude and began to call on countries to increase production cuts, and showed this by raising OSP and reducing production by an additional 1 million barrels per day. Her sincerity, but referring to Saudi Arabia’s recent production and export data, she found that Saudi Arabia has not made real concessions to its Eurasian market share, whether in terms of OSP or crude oil exports. In particular, Saudi Arabia’s average daily export volume in April increased by 1.95 million barrels/day year-on-year, 26% higher than the level in March, reaching an average daily volume of 9.36 million barrels/day, setting a new record. Its crude oil exports to China last month exports doubled. At the same time, Saudi Arabia’s release of OSP in June was full of twists and turns, which also reflected the huge differences within Saudi Arabia on the “price war”.
“In addition, considering that the oil wells in many Middle Eastern countries such as Saudi Arabia are spontaneous blowout wells, they have the ability to resume production faster than Russia’s old oil fields.” Li Wanying suggested Investors take an objective view of this additional production cut of 1 million barrels per day. Once oil prices return to a relatively reasonable level, the competition for export shares among various countries may once again be in an embarrassing situation.
Although in Yang An’s view, judging from the inventory data released by the U.S. EIA in the last four periods, it is certain that the current market supply and demand are improving, and the pace of inventory accumulation is declining. very obvious. But in essence, the U.S. market and even the global market are still in a state of accumulation.
“In fact, the current global floating warehouse inventory is close to a four-year high.” Wu Xiaoming, a crude oil analyst at Yongan Futures Background Research Institute, said. Especially recently, after a short period of inventory reduction, there has been a rebound again, reaching 164,996 thousand barrels (data on May 10), compared with 153,687 thousand barrels on May 3, an increase of about 10,000 thousand barrels.
However, considering that the current market has generally shaken off the early pessimism, and major ETFs and funds have learned from the last experience, they have carried out Plan and move positions in advance. Yang An believes that the possibility of a negative value in the June contract of WTI crude oil is relatively small. However, Li Wanying believes that if the epidemic in Europe and the United States gets out of control and the market falls into panic, although the possibility is small, this extreme situation cannot be completely ruled out. In Li Wanying’s view, although European and American countries have recently put the resumption of work and production on a daily basis, the standards for measuring the resumption of production vary widely from country to country, which in essence can easily lead to a second outbreak of the epidemic, and the situation will get out of control again. “Referring to an academic paper from Harvard University, under the most optimistic scenario, the new coronavirus will accompany mankind for 5 years and will easily relapse at the turn of autumn and winter. This will also cast a shadow on the road to resumption of work in various countries.”
In addition, through evaluation, she found that as of May 1, U.S. residents’ transportation expenditures dropped by nearly 70%. EIA data also shows that the gasoline inventory that has been accumulating after the resumption of work has reached a temporary turning point, but other refined oil and crude oil inventories are still difficult to change the increasing trend. Considering that the upcoming summer is generally the peak travel season for American residents, due to the impact of the epidemic, consumption may not be as expected. “Therefore, the road to resumption of work and production in Europe and the United States is not expected to be too smooth. In addition, even if there is no second outbreak of the epidemic, based on the situation in China, it is expected that the recovery of the demand side will take 2-3 weeks, and the boost to the market will be delayed. Appear.”
Under such circumstances, Li Wanying suggested that investors should view changes in the supply side rationally, and the current recovery of demand still dominates the direction of the oil market. Market news is complex, including geopolitical and other uncertain issues that may cause short-term disturbances. Oil prices are expected to fluctuate widely in the near future, and it is necessary to closely track the development and changes of the epidemic.
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