U.S. oil cloth once fell 3.3%. As public health events spread rapidly around the world, risk aversion swept across Asian markets, causing oil prices to fall the most since February 3. Over the weekend, finance ministers and central bank governors from the world’s 20 largest economies said that downside risks to global economic growth continue to exist due to disruptions in supply chains.
IHS Markit’s U.S. manufacturing and services composite purchasing managers’ index fell for the first time in seven years, leading to a sell-off in the stock market and also dragging down oil prices; Jan Stuart, global energy economist at Cornerstone Macro, said, The market is witnessing a broad risk-off move, with oil following the market’s decline as investors withdraw funds.
The stock market sell-off weakened the outlook for crude oil demand
U.S. stocks sold off on Friday, with the Nasdaq recording its biggest one-day percentage drop in about three weeks as public concerns The impact of the epidemic, and data showing that U.S. business activity stagnated in February, heightened investors’ concerns about the economy.
As of the close of last week, the S&P 500 index fell 1.1% to 3337.75 points, a weekly decline of 1.3%; the Dow Jones Industrial Average fell 0.8% to 28992.41 points; the Nasdaq Composite Index fell 1.8% , reported 9576.59 points; the Nasdaq 100 index fell 1.9%, reported 9446.688 points, a weekly decline of 1.8%.
European stocks ended lower after data showed U.S. business activity stalled, adding to losses triggered by rising coronavirus infections in China and around the world. The pan-European STOXX 600 index fell 0.5%, retreating 0.6% for the week after rising in the previous two weeks. Germany’s DAX index fell 0.6%, Britain’s FTSE index closed down 0.44%, and France’s CAC-40 index closed down 0.54%.
It should be noted that the trend of crude oil is often directly proportional to the stock market. Because the weakening of the stock market will weaken the market demand prospects for crude oil, thus putting pressure on oil prices.
The global economic growth forecast in 2020 is lowered to 3.2%
IMF Chairman Georgieva spoke at the G20 Finance Ministers It was mentioned during the meeting that the global economic growth forecast for 2020 was lowered by 0.1 percentage points from the then to 3.2%.
The baseline scenario assumption is that “based on the implementation of announced policy measures, the economies of some Asian countries can return to normal levels in the second quarter. Therefore (under this assumption), public health The impact of the security incident on the global economy is still relatively small and short-lived.
In response, Federal Reserve officials said on Friday that although the public health incident is weakening economic growth across Asia, the impact on the U.S. economy should It is short-lived and may not require the Fed to respond by cutting interest rates.
Federal Reserve officials expressed confidence in the prospects of the United States this year, and all mentioned growth expectations of 2-2.25% and a strong labor market.
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Crude oil demand shows obvious signs of decline
Due to the sudden outbreak of public health events , oil demand in Asia has dropped sharply. The International Energy Agency IEA stated in a report that public health security in Asia has a profound impact on the oil market, so this crisis has dealt a serious blow to global oil demand.
Survey It shows that due to the collapse of downstream fuel demand, Asian refiners may significantly reduce the daily processing volume of crude oil this month. In communications with companies, we also learned that some refineries are dependent on surrounding crude oil pipelines, and crude oil receipts have not been significantly affected. However, some refineries have made it clear that they will no longer place orders for April and will mainly focus on digesting current inventories.
Some people familiar with the matter revealed that due to the current losses in refining, it is better to store oil than process it. Data also shows shipping congestion , meaning that when transportation bottlenecks are eliminated, goods will be unloaded quickly.
OPEC’s further actions will not help curb the market’s bearish sentiment
According to reports, Saudi Arabia, Kuwait and the United Arab Emirates have discussed a combined 300,000 barrels per day crude oil production cut by the three countries if Russia does not assist in further production cuts.
Saudi Energy Minister Abdulaziz bin Salman refuted Dow Jones’s suggestion of leaving OPEC+ The alliance’s reports are “nonsense”, adding that Saudi Arabia is continuing to dialogue with OPEC+ partners and will take collective action.
Last week, an invitation letter sent by OPEC confirmed that the meeting will be held as scheduled The original date was scheduled to be held. Delegates said that invitations have been issued for a meeting between OPEC and allies on March 5-6, indicating that plans for an emergency meeting have faded. When OPEC+ meets in December, it has been planned The meeting will be held again in early March.
Saudi Arabia, OPEC’s largest oil producer, had urged an early meeting to consider further production cuts as the public health crisis impacted fuel demand. Russia, the most important oil producer among OPEC allies, has been resisting the plan.
The current common position of the oil-producing countries is that it is unwise to hold the OPEC meeting in advance. They continue to discuss the oil market with Saudi Energy Minister Abdulaziz. The current situation in the oil market is extremely It is uncertain and changes very quickly. Russian Energy Minister Novak did not mention whether Russia supports further deepening production cuts.
Fitch Macro Research said that further actions by OPEC will not help curb the market’s bearish sentiment, and Libya’s recentThis is illustrated by the fact that the production interruption (nearly 1 million barrels per day) has not brought a substantial boost to oil prices. In addition, the unrest in Iraq is still intensifying and may affect upstream and export facilities, increasing the possibility of supply disruptions, but it has not provided significant support to oil prices.
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