On April 9, the market experienced Super Thursday.
As we all know, April 9 is the last trading day before the overseas Easter holiday. On this day, not only will the United States release its initial jobless claims report for the week of April 4, but OPEC+ will also hold an emergency meeting on the same day to discuss the issue of deep production cuts again. In addition, the Federal Reserve made another effort that day and announced a US$2.3 trillion measure to support local governments and small and medium-sized enterprises.
On April 9, OPEC+ finally reached a consensus on production reduction. In a statement, OPEC+ stated that starting from May 1, 2020, OPEC+ will reduce production by 10 million barrels per day, which will be the first round of production cuts for two months. At the same time, OPEC+ also confirmed that it will reduce production by 8 million barrels per day from July 2020 to December; and by 6 million barrels per day from January 2021 until April 2022.
This is the largest production reduction agreement since the establishment of OPEC. It is unclear whether the production reduction agreement is premised on the United States’ commitment to reduce production at the G20 meeting on Friday, but according to a representative, OPEC+ hopes that G20 countries other than OPEC+ will reduce production by an additional 5 million barrels per day.
The G20 energy ministers will hold an online meeting at 20:00 Beijing time on Friday, with Saudi Arabia as the chairman. The United States and other countries will have the opportunity to consider and possibly participate in production cuts.
International oil prices fell back after a surge and plunged in late trading. The negotiation process of the OPEC+ production reduction meeting disappointed investors. As of the close, the main contract of WTI crude oil fell 9.29% to US$22.76/barrel. It rose by about 13% during the session, reaching a maximum of US$28.36/barrel; the main contract of Brent crude oil fell by 4.14% to US$31.48/barrel. It once rose by more than 10%, reaching a maximum of $36.40 per barrel.
U.S. stocks closed higher for the second consecutive day on Thursday. As of the close, the Dow rose 285.80 points, or 1.22%, to 23719.37 points, the Nasdaq rose 0.77% to 8153.58 points, and the S&P 500 rose 1.45% to 2789.82 points.
OPEC+ reached an agreement to reduce production, and oil prices went on a super “roller coaster”
International oil prices fell back after rising and plunged in late trading. The negotiation process of the OPEC+ production reduction meeting disappointed investors. As of the close, the main contract of WTI crude oil fell 9.29% to US$22.76/barrel. It rose by about 13% during the session, reaching a maximum of US$28.36/barrel; the main contract of Brent crude oil fell by 4.14% to US$31.48/barrel. It once rose by more than 10%, reaching a maximum of $36.40 per barrel.
On April 9, OPEC+ finally reached a consensus on production reduction. In a statement, OPEC+ stated that starting from May 1, 2020, OPEC+ will reduce production by 10 million barrels per day, which will be the first round of production cuts for two months. At the same time, OPEC+ also confirmed that it will reduce production by 8 million barrels per day from July 2020 to December; and by 6 million barrels per day from January 2021 until April 2022.
Previously, it was reported that Saudi Arabia and Russia had reached an agreement on a significant production reduction, which may be as high as 20 million barrels per day.
U.S. President Trump said last week that he expected and hoped that Saudi Arabia and Russia would cut oil production by 10 million barrels to 15 million barrels per day, accounting for 10% of the total global supply. —15%. Trump did not commit to any action by U.S. companies.
Li Wanying, a senior energy and chemical analyst at Donghai Futures Research Institute, told a reporter from Futures Daily that the results of the meeting were basically in line with market expectations and would have a neutral short-term impact on related energy and chemical products in the domestic market. In the medium term, the production cuts by OPEC countries will gradually reduce supply pressure. Considering that some independent shale oil companies in the United States have shut down drilling, it is expected that the output of non-OPEC countries will also slowly decline in the later period. However, before the turning point of the global epidemic arrives, a 10 million barrel/day production reduction will be difficult to fully offset the negative impact of a 20 million barrel/day decline in consumption.
“The first-stage bottom support for oil prices has emerged, but further upside in the future depends on when the epidemic is fully controlled. In the absence of other positive factors, it is expected that In the future, Brent oil will operate in the range of 30-40 US dollars per barrel.” Li Wanying believes.
Li Yunxu, a crude oil analyst at SDIC Essence Futures, said that this production reduction agreement has more confidence in the crude oil market than reality. According to the recent year-on-year decline in global crude oil demand, it may be as high as 20 million barrels per day. Yes, it is difficult to reduce production to reverse the accumulation of global oil products under the influence of the epidemic, but it is very important to significantly reduce supply pressure and slow down the accumulation of oil products to provide time lag for waiting for the epidemic to improve. On the other hand, the atmosphere for increasing production in March was already the most pessimistic time for supply-side expectations. OPEC+’s management of expectations for long-term production cuts has significantly weakened the downward pressure on oil prices.
As for the market outlook, Li Yunxu believes that the weakness of spot and near-month contracts in the context of oversupply will continue to suppress oil prices and monthly differences, and the impact of the epidemic on crude oil demand will be difficult to sustain. It will recover in the short term, but active and passive production cuts on the supply side will support the already low valuation of oil prices, and the probability of wide oscillations at the bottom of oil prices is relatively high. In addition, it should be noted that the number of active oil rigs in the United States has dropped by more than 100 units in the past month and is still continuing. The sharp decline in the contribution of new shale oil wells and the decline of old wells may reduce the production in the second quarter to more than 2 million barrels per day. , against the backdrop of significant reductions in the supply side.�Loan facilities could provide up to $600 billion in loans.
It is understood that the Fed’s measures include details about major business lending programs and measures to support the faltering U.S. economy. several other initiatives. Additionally, the Fed provided more details on its market interventions, including plans to purchase corporate bonds at investment-grade levels as well as high-yield bonds, also known as junk bonds.
Under the terms first outlined, the loans will be available to businesses with 10,000 or fewer employees and $2.5 billion in revenue in 2019. Principal and interest payments will be deferred for one year.
The Fed said the programs would total $2.3 trillion, including the Paycheck Protection Program and other measures aimed at providing capital to small businesses, as well as through $500 billion in loans Measures planned to boost municipal finances.
“Our nation’s top priority must be to respond to this public health crisis, provide medical care to patients, and limit the further spread of the virus.” Federal Reserve Chairman Weir said in a statement Said, “In a period when economic activity is restricted, the Federal Reserve’s role is to provide as much relief and stability as possible, and our actions today will help ensure that the eventual recovery is as strong as possible.”
These measures reinforce the Fed’s already aggressive efforts to keep markets functioning and support the economy. The U.S. economy has been strapped as it tries to contain the spread of the coronavirus.
“The Fed’s bold actions helped offset the more dire news on the job market. I would say that the Fed’s strong actions today underscore the Fed’s unlimited firepower. That will help keep markets calm this week to some extent,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Federal Reserve Chairman Jerome Powell said on Thursday that the central bank will continue to use all available tools until the U.S. economy begins to fully recover from the damage caused by the new coronavirus epidemic, although he acknowledged that the central bank will continue to use all tools at its disposal. Powers are limited.
At the same time, the U.S. Department of Labor released the number of initial jobless claims for the week ending April 4. The report stated that the number of initial jobless claims in the week to April 4 was 6.606 million, compared with the expectation of 5 million, and the previous value of 6.648 million.
Including data from the past two weeks, the number of initial jobless claims in the United States has exceeded 16 million in the past three weeks. If you compare this data with the 151 million employed people in the previous month’s employment report, it is not difficult to find that since March, due to the impact of the epidemic, the United States has lost 10% of its labor force within three weeks.
Regarding today’s data, some commentators believe that the number of people applying for unemployment benefits in the United States has exceeded 15 million in the past three weeks. The number of initial jobless claims in the week ending April 4 was approximately 6.6 million, a slight decrease from the upwardly revised 6.87 million in the previous week, but it still exceeded 6 million for two consecutive weeks, as the United States still adopts strict prevention and control measures. The measures brought the economy to a standstill.
Gregory Daco, chief U.S. economist at Oxford Economics in New York, said that the job market has entered a traumatic period, and the unemployment rate is expected to soar to 14% in April.
Previous media reports stated that a special phenomenon emerged in the unemployment situation during this epidemic, that is, because the unemployment benefits that can be applied for after being laid off are higher than they wages, so many Americans actively choose to be laid off. Regarding this method of voluntarily resigning to take advantage of state financial subsidies even though you can get a salary, experts said that it will not increase the financial burden, and some experts even encourage this kind of practice of taking advantage of subsidies. The reason why I say this is mainly because some economists say that during this process, the federal budget should first pay wages rather than let companies bear it, so as to ensure that companies will not fall deeply into debt, which will then lead to a credit crisis.
Affected by the end of three consecutive rises in the number of initial jobless claims and the announcement of new measures by the Federal Reserve, the US dollar continued to suffer a sell-off, falling as low as 99.35. </p
