1. Market review: The two oil markets came out of the “V” market. WTI crude oil once fell by more than 2% and fell below $78, then recovered some lost ground, and finally closed down 0.38% to $78.80/barrel; Brent crude oil once fell It fell to a low of $84.11 before closing down 0.59 percent at $85.25 a barrel.
2. Inflation is too stubborn! US January CPI rebounded month-on-month The US January CPI data showed that US inflation was more stubborn than market expectations. The annual rate of unadjusted CPI in the United States in January recorded 6.4%, exceeding the expected 6.20%, marking the seventh consecutive month of decline and the smallest increase since October 2021. The annual rate of core CPI in the United States, not adjusted seasonally, recorded 5.6% in January, the smallest increase since December 2021. Driven by gasoline and housing costs, the seasonally adjusted CPI rate in the United States recorded a monthly rate of 0.5% in January, the largest increase since June 2022. After the release of the data, Fed swaps are priced at the Fed’s July 2023 policy rate peak at 5.27%, and the swap contracts no longer fully price in a 25 basis point rate cut by the Fed in 2023.
According to OPEC’s monthly report, it raised its forecast for the growth rate of global crude oil demand this year from 2.22 million barrels per day to 2.3 million barrels per day.
3. API inventories increased across the board for the third consecutive week, and crude oil inventories increased significantly by 10.5 million barrels, the eighth consecutive week of increase. Crude inventories at Cushing rose for a seventh straight week, while gasoline and distillate stockpiles also rose.
4. Egypt’s Suez Canal Authority stated that starting from April 1, the surcharge for loading crude oil tankers will be adjusted to 25% of the normal transit fee, and the others will be adjusted to 15%.
6 The European Parliament in Strasbourg passed the 2035 European ban on the sale of fuel-powered vehicles with 340 votes in favor, 279 against and 21 abstentions.
Tyler Richey, co-editor, Sevens Report Research
The U.S. stock dump from April to June was part of a previous congressional mandate that was tied to the annual budget and has been in place for nearly a decade. But when traders see the news of stockpiling, they think that there will be more supply in the market, so they choose to sell crude oil first, and then study its problems. The news came after Russia announced an output cut of 500,000 bpd starting in March in retaliation for price caps imposed by Western countries. Russia’s production cuts are expected to total around 15 million barrels in March, but the 26 million barrels of crude oil released by the United States from April 1 will make up for this loss, at least in the short term.
Oanda analyst Ed Moya
Oil prices fell yesterday as more U.S. crude oil was about to hit the market and stubbornly high inflation threatened to force the Federal Reserve to continue raising interest rates. The crude oil market should have tightened as traders expected the next step in the U.S. plan would be to replenish inventories. Oil prices could be in the danger zone if the bond market sell-off intensifies and leads some traders to see a deepening recession. As the market is more pessimistic about the US economic growth outlook, this means that the market may shift from the expected “soft landing” to a short-term mild recession, or even a “classic recession”.
Stephen Innes, analyst at SPI Asset Management
There are still uncertainties in the trend of crude oil prices. U.S. crude oil supply remains oversupplied, while Russian crude output continues to attract bulls. Chinese demand for copper may be the best indicator of commodities, but orders data show that actual demand has not yet shown signs of recovery beyond normal seasonality, suggesting that commodity prices, including crude oil There is a potential risk of delayed recovery in the second quarter. But few are bearish, as most still believe pent-up demand will dominate in the second quarter as China’s consumption recovery normalizes. Therefore, given the extent of the pain for the bulls, we believe the path of least resistance for oil prices will still be higher from here, while the structural theory that many analysts agree with remains unchanged. But this does not mean that the possibility of Brent oil prices falling below $80 per barrel again in the first quarter is very small. In addition, the possibility of a hawkish re-pricing of the interest rate curve by the Federal Reserve, fears of a recession in large oil-consuming economies, a global inventory glut and a lack of strong economic growth in Asia will all be risk factors for the oil market in the near term.
We expect Russian crude oil production to fall from 10 million b/d in early 2022 to below 9 million b/d in 2023 This increase is therefore expected to lift global oil demand above 103 million barrels per day in the second half of the year. We expect non-OPEC+ supply to grow only modestly this year, with key U.S. crude production rising by 1.3 mb/d, but U.S. crude demand growth to be below 1.6 mb/d this year. We maintain our bullish outlook on oil, continuing to expect Brent to rise to $110 this year and WTI to $107.