1. US House of Representatives Speaker McCarthy said Monday morning (local time) discussions with White House negotiators on the debt ceiling were fruitful and no agreement had been reached, but said a deal could be reached on Monday or Tuesday. The media broke the news that the two sides have made progress on the excess epidemic funds and the reform of the energy licensing system. U.S. Treasury Secretary Janet Yellen again urged that it is “highly likely” that the Treasury will run out of cash by early June.
2. On Monday, many officials of the Federal Reserve gave speeches, and the overall hawks and doves were mixed
The president of the St. Louis Fed, known as the “Eagle King,” said that the Fed will have to raise policy rates by 50 basis points this year, and is expected to raise rates twice more.
Minneapolis Fed President Neil Kashkari said it would be very difficult to decide whether to raise or pause rates at the June meeting, but rates may need to be raised further from now on. He also warned that it was too early to declare that the banking problems were all resolved.
San Francisco Fed President Daly refused to say what action the Fed should take at its June meeting, stressing the need to observe more data, hoping to see the core inflation indicators fall further, and the effect of tightening credit is equivalent to a few extra interest rate hikes. Second-rate.
Atlanta Fed President Bostic said there is a lag in the Fed’s policy actions and he is willing to wait “for a while” to see how the economy performs. Richmond Fed President Barkin also said he would not prejudge the June policy decision.
According to CME’s “Fed Watch”, the probability of the Fed not moving in June fell slightly to 71.5%.
3. According to a statement from the Kremlin, Russian President Vladimir Putin ordered the government to fine-tune existing indicators and establish new indicators to calculate oil prices for tax purposes to reduce discounts to global crude prices.
MARKET VIEWPOINTS
Holland International
Oil prices posted their first weekly gain since mid-April. Brent crude futures rose 1.9% last week, trading above $75 a barrel. Still, speculators remain negative on the oil market, with net long speculative positions in Brent crude futures falling by 6,020 contracts to 106,722 contracts as of last Tuesday, the lowest level this year. Digging deeper into the data, the move was driven by long liquidation, while total short positions were sizable at 94,880 contracts. Meanwhile, diesel futures continued to see further short-covering last week, with speculators repurchasing 7,059 lots in the past week for a net short position of 20,652 lots. Speculators still hold a large net short position in diesel, indicating that the risk of a rally triggered by short covering remains.
In addition, drilling activity in the United States continues to slow, and a huge supply deficit is expected in the crude oil market in the second half of this year. Producers appear to be responding to weak oil prices rather than expectations of tighter supplies in the market later this year. Moreover, the macro situation may also make producers more hesitant. However, this trend is good news for OPEC+, as it shows that they will be able to continue supporting prices (by cutting production) without risking losing market share to US suppliers.
PVM Group
The balance between supply and demand of crude oil tends to tighten obviously, but the market reaction is not enthusiastic. Brent has been unable to challenge the $80 level since earlier this month. Why this is the case, some scholars believe that demand forecasts are much higher than consumer prices, the economic outlook is actually more gloomy than currently believed, exacerbated by the uncertainty of the debt ceiling negotiations. Second, resilient and undervalued Russian crude exports are also helping to fill the emerging supply gap.
Investors currently lack confidence in the rebound in oil prices. The combined net long speculative position in WTI and Brent fell to 249 million barrels last week, the second-lowest this year. The $18 billion committed to the two crude contracts is a far cry from the annual peak of $39 billion. Despite this rather persistent gloom, a US default is expected and likely to be avoided, while in the current two-tiered crude export market some countries will do what they can to buy heavily discounted Russian oil. Therefore, it is unlikely that the market will fall below the bottom of the mid-term trading range, which is around $70 for Brent. As the second half of the year approaches, it won’t be too far before Brent recovers above $88. Only a U.S. default or recession would cause a downward revision in crude demand to change that expectation.
Fereidun Fesharaki, Chairman, FGE Energy Consulting
If demand for crude oil grows as expected, and Western sanctions on Russian crude curb crude production growth, then the world will face supply problems. At present, Russia can maintain crude oil production at the level of 10-11 million barrels per day, but in view of the Western sanctions against Russia, Russia may not be able to ensure the production growth of 2 million barrels per day in the future. Also, I think that unlike OPEC, which was trying to hold back shale by capping prices when it faced the threat of US shale oil, today OPEC is acting more as it seeks to balance fossil fuel demand as many countries shift to low-carbon energy. Monetize crude resources before peaking. Finally, I expect oil prices to remain above $80/barrel, and if the market tightens, crude oil prices could exceed $100/barrel.
Standard Chartered Bank
We estimate that the average demand in the global crude oil market this year will be 100.94 million barrels per day, an increase of 156,000 barrels per day compared with last month, and the demand problem in the crude oil market has been improved to a certain extent. In the second quarter of this year, global crude oil demand will reach 100.47 million barrels per day, compared with 101.92 million barrels per day in the third quarter and 101.78 million barrels per day in the fourth quarter. There appears to be a disconnect between what energy economists are seeing in the data and what speculative traders are doing. We believe this disconnect is driven by an increasingly top-down sentiment in the crude oil market and a macro backdrop that we find most traders in Crude oil demand has become more pessimistic over the past three months.
