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All of a sudden! Saudi Arabia threatens to launch a new round of oil price war! Fauci warns that the number of new confirmed cases in the United States could reach 100000 a day.
Jul 2,2020 08:01CST
translation
Source:Futures daily
The content below was translated by Tencent automatically for reference.

SMM: Saudi Arabia has threatened to wage an oil price war unless other OPEC members make up for production cuts they have failed to comply with, according to sources. Prince Abdul-Aziz bin Salman, the Saudi energy minister, will issue an "ultimatum" to Angola and Nigeria in recent weeks, requiring them to submit detailed guarantees to limit oil production.

Us crude oil stocks fell 7.195 million barrels to 533.5 million barrels in the week ended June 26, the biggest weekly decline in nearly six months, with the market expected to increase by 73000 barrels, according to data released by the US Energy Information Administration (EIA) on Wednesday. Oklahoma Cushing crude stocks fell by 2.63 million barrels last week.

International oil prices rose and fell on Wednesday. By the end of the day, WTI crude oil futures closed at $39.82 a barrel, up 1.40 per cent, while Brent crude futures closed at $42.03 a barrel, up 1.84 per cent.

On Wednesday night, the United States announced that ADP employment in June increased by 2.369 million, the largest increase in history, and is expected to increase by 2.9 million. The previous value was sharply revised up from a decrease of 2.76 million to an increase of 3.065 million, an increase of 5.825 million, which is larger than the total in 2018 and 2019.

The Fed released the minutes of its June 9-10 policy meeting on Wednesday local time. During the last meeting, the Fed left interest rates unchanged and held in-depth discussions on limiting bond yields and strengthening guidance on future policy-making.

Officials at the meeting said that "the current monetary policy position is still appropriate", but they said the Fed should strengthen its guidance to the market. The minutes said it was necessary to "implement a highly loose monetary policy for a period of time" and said the conditions for implementing the policy should be clearly stated.

The outbreak of New Crown pneumonia in the United States is accelerating, with new confirmed cases hitting a record high of more than 48000 in a single day on Tuesday. Fauci, an important member of the White House New Crown virus response working Group and director of the National Institute of Allergy and Infectious Diseases, said on June 30 that the anti-epidemic path in the United States is going in the wrong direction, and the number of new confirmed cases may increase at a rate of 100000 per day.

Saudi Arabia threatens to launch a new round of oil price war

After last week's correction, international oil prices began a new round of rebound this week. On Wednesday, international oil prices rose all the way, with Brent crude and WTI crude oil rising more than 3 per cent at one point, but quickly falling back from their highs. By the end of the day, WTI crude oil futures closed at $39.82 a barrel, up 1.40 per cent, while Brent crude futures closed at $42.03 a barrel, up 1.84 per cent.

Sources said Saudi Arabia threatened to wage an oil price war unless other OPEC members made up for production cuts they had failed to comply with. Prince Abdul-Aziz bin Salman, the Saudi energy minister, will issue an "ultimatum" to Angola and Nigeria in recent weeks, requiring them to submit detailed guarantees to limit oil production.

Sources pointed out that at the OPEC teleconference on June 18, Prince Abdul Aziz said that Saudi Arabia would sell crude oil at a discount to crack down on Angola and Nigeria.

Us crude oil stocks fell 7.195 million barrels to 533.5 million barrels in the week ended June 26, the biggest weekly decline in nearly six months, with the market expected to increase by 73000 barrels, according to data released by the US Energy Information Administration (EIA) on Wednesday. Last week, Oklahoma Cushing crude oil stocks fell by 2.63 million barrels; US refined oil stocks decreased by 593000 barrels, with the market expected to increase by 163000 barrels; and US gasoline stocks increased by 1.199 million barrels, while the market estimated a decrease of 1.524 million barrels.

Zhong Meiyan, director of the Energy and Chemical Department of Everbright Futures Research Institute, said that international crude oil is currently in an oscillating market. It is reported that the Oman Oil Ministry will reduce the crude oil quota delivered to all customers in September, demonstrating the determination of oil-producing countries to implement their production reduction commitments, which is the main support for the current positive market. In addition, the Libyan National Oil Company has asked companies to prepare for the resumption of oil production. It also raises supply concerns. On the whole, the current oil price is driven by multiple news aspects, showing the rhythm of oscillatory operation. " She said.

According to Yu Jiansen, a researcher at Zhaojin Futures Energy Co., Ltd., after two months of production reduction, US production has dropped by 2.3 million barrels per day from its peak, and the number of active drilling rigs in the United States has also recorded a decline for 16 consecutive weeks, which has injected strong confidence into the market. "in fact, since the implementation of the OPEC+ production reduction agreement, the international oil market has completely reversed, and the rise is only a matter of time and extent, and the future still needs to pay attention to the changes in the data of various indicators in the international oil market." Yu Yansen said.

In the domestic market, asphalt futures rose strongly yesterday, causing market concern. In this regard, Yu Jiansen said that for asphalt, the recent spot rise in asphalt, but asphalt futures did not start to rise. As of June 30, the futures price is even lower than the spot price, but the asphalt is basically good, the inventory of the factory warehouse is 40% lower than that of the same period last year, and the social inventory is also 3% lower than that of the same period last year. The spot consumption is normal and the demand is good. Then the stagflation of asphalt futures caused by last week's crude oil pullback ended at the start of the rebound in crude oil, rising sharply on Tuesday and Wednesday, achieving basically flat water. In the future, the fundamentals of asphalt are still relatively preferred, but we still need to judge according to the actual situation of crude oil. The trend of crude oil determines the future direction of asphalt.

The Federal Reserve hinted to continue to "release water", and Fauci warned that the number of new confirmed cases in the United States could reach 100000 a day.

On Wednesday night, the United States announced that ADP employment in June increased by 2.369 million, the largest increase in history, and is expected to increase by 2.9 million. The previous value was sharply revised up from a decrease of 2.76 million to an increase of 3.065 million, an increase of 5.825 million, which is larger than the total in 2018 and 2019. Of this total, manufacturing employment increased by 88000 in June and decreased by 719000 in May. Employment in the construction sector increased by 394000 and decreased by 22000 in May. The hotel industry had the largest increase in employment, at 961000, while small businesses overall increased by 937000.

According to foreign media reports, the vice president of ADP Employment data Company said that as the economy continues to recover slowly, there has been a significant rebound in the industries with the worst unemployment. 70% of the jobs added this month come from leisure, hotel, trade and construction.

"despite the good performance of the ADP employment data in June, with a sharp rebound in the number of new confirmed cases in many US states and delays in restarting the economy, there are still uncertainties in the US job market, and follow-up attention needs to be paid to the status of epidemic prevention and control and the progress of trade negotiations." Chen Chang, an analyst of Yide Futures Stock Index Futures, said.

The Fed released the minutes of its June 9-10 policy meeting on Wednesday local time. During the last meeting, the Fed left interest rates unchanged and held in-depth discussions on limiting bond yields and strengthening guidance on future policy-making.

Officials at the meeting said that "the current monetary policy position is still appropriate", but they said the Fed should strengthen its guidance to the market. The minutes said it was necessary to "implement a highly loose monetary policy for a period of time" and said the conditions for implementing the policy should be clearly stated.

In addition to the discussion of yield curve control and forward guidance, members also discussed the impact of the Fed's increased asset purchases this year. Officials say "constraints" in the current environment make purchases less effective than they were after the 2008 financial crisis.

The outbreak of New Crown pneumonia in the United States is accelerating, with new confirmed cases hitting a record high of more than 48000 in a single day on Tuesday. Fauci, an important member of the White House New Crown virus response working Group and director of the National Institute of Allergy and Infectious Diseases, said on June 30 that the anti-epidemic path in the United States is going in the wrong direction, and the number of new confirmed cases may increase at a rate of 100000 per day.

Domestically, the Shanghai Composite Index broke through 3000 points yesterday, and the futures of the three major stock indexes all rose to varying degrees. Since mid-to-late May, with the continued rebound in US stocks, northward capital inflows have continued to become an important driving force for A-share oscillations. Recently, from the time-sharing map of index and northbound funds, the correlation between them is very high, indicating that from the perspective of funds, the flow of northward funds at this stage has a vital impact on the market. " However, with the end of FTSE Russell's expansion, there is a lot of uncertainty about the short-term northbound capital flow, which mainly comes from external factors, Chen said.

"at present, US stocks are in a delicate tight balance. Although the market has been disturbed by the rebound in new confirmed cases in the short term and the warming of trade frictions, the Fed continues to maintain a loose posture, which, to some extent, supports the market, so it is not enough to induce investors to take risk aversion for the time being. However, if the rebound in the epidemic begins to affect investors' expectations of the pace of economic recovery, or if more frequent Sino-US games threaten the implementation of the Sino-US trade agreement, then the possibility of large fluctuations in the US stock market cannot be ruled out. If US stocks fall due to epidemic prevention and control, economic downturn and other factors, whether northbound funds can continue to flow needs to be observed. " Chen Chang said.

For A-shares, Chen Chang said that in July, A-shares will face the test of second-quarter economic data and medium reports of listed companies, and if the data recover more than expected, it will change the current relative prosperity pattern of various industry sectors. and investors' expectations for future liquidity. In the short term, if the market wants to continue to rise, then it needs to continue to pull the big index up until individual stocks are pulled up, rather than 28 differentiation. In operation, it is recommended that investors pay attention to the cross-variety arbitrage of multi-IH short IC, and if the market volume rises together, the IC short position will be closed.

The price of precious metals fell at a high level.

After the release of ADP employment data in the United States, affected by the bad news, the price of COMEX gold futures fell, falling nearly 2% at one point in intraday trading, reversing the previous rally. As of Wednesday's close, the August contract for COMEX gold futures closed 1.14% lower at $1779.9 an ounce.

In fact, according to Huishang Futures Precious Metals analyst from Shanshan, the recent performance of precious metals is strong, especially gold rising momentum is very strong, COMEX gold broke through the nearly four-month oscillation range. Shanghai gold hit a record high in midday trading on Wednesday, and silver rose strongly.

"the precious metal plate has risen sharply again, mainly because the confirmed cases of new crown pneumonia in the world are still on the rise, the risk of a second outbreak has risen sharply, and repeated outbreaks will benefit gold prices in the long run. At the same time, tensions between China and the United States may escalate, and risk aversion in the market is high. In addition, the global central banks continue to ease, the low interest rate environment will also be the main driving force to support the gold price upward. At present, the balance sheets of central banks such as the United States, Europe and Japan have reached record highs. Under the disturbance of the epidemic, global central banks may maintain a low interest rate environment for a long time. " From Shanshan said, from a financial point of view, gold ETF holdings reached a new high, the continuous participation of funds is also an important factor to support gold prices.

According to Wang Jun, an analyst at Minmetals Economic and Trade Futures, the market is still focused on the sluggish economy and extremely loose monetary policy under the epidemic. In the economic downturn, distal inflation expectations rise again, creating an excellent rising environment for gold and silver. At the same time, the return of the fund bulls that left the market in the early stage has also boosted the price of gold and silver to a certain extent. The current net long position held by the fund is not high, and it is expected that there will still be room to increase positions in the future, and will continue to push noble metal prices.

"the precious metals sector still has upward momentum in the future due to epidemic disturbances, loose policies and macroeconomic depression, but we need to be on guard against the risk of a stronger dollar and lower-than-expected inflation." From Shanshan.

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