The White House is communicating with OPEC on oil prices. Powell and Yellen have made clear the need to reduce debt, but the low interest rate environment is expected to continue.
Affected by the slump in the U.S. stock market, the strength of the U.S. dollar and the increase in API inventories, international oil prices closed lower. The API report showed that U.S. crude oil inventories increased by 4.127 million barrels last week. OPEC expects oil demand in 2021 to be 96.6 million barrels per day.
“Power rationing” has become a hot word recently, and everyone knows about it. Under the “dual control of energy consumption”, the commodity market has also been heated up! Market participants believe that “dual energy consumption control” combined with power outages and production restrictions will shrink the supply side of raw materials or further push up the prices of related products.
The White House is communicating with OPEC about oil prices, and Powell and Yellen have made clear the need to reduce debt
Yesterday evening, a U.S. White House official stated that the United States has been paying attention to oil prices and is not only cooperating with OPEC but also studying various methods to solve the oil cost problem.
In the early morning of September 29, Federal Reserve Chairman Powell and U.S. Treasury Secretary Yellen attended a U.S. Senate hearing. Powell said raising the debt ceiling was necessary and the potential impact of inaction would be severe. “The resurgence of the epidemic has slowed down the recovery. Now the taper conditions are almost met, but it is still far away from raising interest rates,” Powell said.
U.S. Treasury Secretary Yellen said that interest rate costs are expected to remain low and the low interest rate environment is likely to continue.
“We are in a low interest rate environment. A better way to measure fiscal sustainability is to look at the real net interest cost of debt. Over the past few years, the real net interest cost of U.S. Treasury debt Debt service costs have been negative,” Yellen said.
U.S. Treasury Secretary Yellen warned that failure to increase or suspend the legal debt limit as soon as possible will face “catastrophic” consequences.
Crude oil prices hit new highs
This Tuesday, Crude oil and natural gas continue to gain strength after rising prices.
According to Dai Yifan, an energy and chemical analyst at Nanhua Futures, the supply side of crude oil is currently tight. First, OPEC increased production by 150,000 barrels per day in August, which was less than expected, and the implementation rate of OPEC+ production cuts was 116%. Secondly, the Gulf of Mexico still has about 16% (300,000 barrels per day) of crude oil production and 25% of natural gas production (541,000 barrels per day). million cubic feet per day) has not recovered. Usually, as long as it is not a catastrophic hurricane, the impact on crude oil and natural gas output will not last more than a week after landing. The impact of this hurricane on output is beyond expectations; finally, since the epidemic in 2020, the U.S. energy industry Capital expenditures are cautious, shale oil and gas drilling platform growth is relatively slow, and U.S. crude oil and natural gas supply growth is slow in the fourth quarter and next year.
“Therefore, from the supply side, when the original supply growth rate was not high, the hurricane caused the production of crude oil and natural gas to decline more than expected, and the supply of crude oil and natural gas became tight.” Dai Yifan said.
At the same time, market demand remains strong. “The expectations of La Niña are increasing. The latest probability given by NOAA is 70%-80%. It is expected to bring a colder winter to Northeast Asia, northern United States and other regions. China, Japan and South Korea in Northeast Asia are the major natural gas majors in the world. In importing countries, the cold winter is expected to drive further demand for natural gas in the winter peak season.” Dai Yifan told reporters that in fact, in the past summer, the Midwestern United States continued to have high temperatures and natural gas power generation surged, which promoted the sharp rise in natural gas prices during the off-season. . At present, cold winter is expected again, and the demand side of natural gas remains strong. With the sharp rise in natural gas and coal prices, the alternative demand for crude oil has strengthened marginally. The fundamentals of the crude oil market are tight supply and improving demand, which drives oil prices to strengthen.
In addition, from the macro perspective, after the Federal Reserve’s interest rate decision, the Taper time point is relatively clear, and the strong US dollar has suppressed oil prices. In Dai Yifan’s view, overall, fundamental-driven logic dominates and oil prices remain strong. Therefore, both crude oil and natural gas are in tight supply. La Niña predicts that global natural gas tensions will continue. Based on the demand for alternative energy, crude oil will also continue to remain strong. </p
