Showing posts from August 29, 2021

Oil Price: Chinese success in controling Covid-19 rekindles the investors' spirit

  China, the apparent epicentre of the Covid-19 catastrophe, once again proved once thing it is really good at – keeping the spread at bay. The data of daily infections, according to Google, shows that the curve is flattening, indeed. In proportion, the Chinese authorities have eased the restrictions that had been in place in major cities. In light of new development, traffic levels are slowly returning to near normal levels with industries gradually gathering the momentum.   The awakening of the world’s second largest economy – and the world’s top crude oil importer – has rekindled the sprit in the markets, which saw the worst monthly drop in oil price in August - for months. The positive sentiment that the investors see with regard to China’s containment of the new wave of the pandemic, is partially responsible for lifting the price of crude oil, despite the warning from the OPEC+ about a surplus of the commodity next year. If the price of crude oil goes up at an exponentia

Apparent unity of OPEC+ and US inventory data elevate the moods in the markets

  Crude oil price rose modestly leaving behind the inexplicable fluctuations that we witnessed in the last few days. The markets breathed a sigh of relief when OPEC+ announced that it will ease the production cuts gradually on Wednesday. What was remarkable is the fact that the time it took for the ministers of the OPEC+ to coming to an agreement in unison. The ministerial meeting, known as the JMMC, unlike the previous meeting that ended in acrimony over the baseline disputes, ended in just 23 minutes. The apparent unity of the OPEC+ also a key factor in lifting the clouds of gloom that had been hovering over the crude oil markets for weeks. Some investors were still anxious yesterday, though. A day before the ministerial meeting, the JTC, Joint Technical Committee of the OPEC+, depicted a picture of a surplus in the crude oil markets in 2022, in the event of production cuts being reversed. Analysts, however, started taking into account two key indicators about the market cond

OPEC+ Ministerial Meeting: how will they handle the balancing act?

  The JTC, Joint Technical Committee of the OPEC+, released its data on the eve of the group’s ministerial meeting scheduled on Tuesday evening at 17:00 at Vienna time. According to the JTC, the global demand of crude oil is going up at a steady rate, but the supply will not be able to catch up with it that could result in a tighter market. The reason, according to the JTC, is the depletion of the global crude oil stocks twice as fast as the daily increase in the output by the OPEC+, began in August for a period of four months; the figures in question are 825,000 and 400,000 bpd respectively. Under immense global pressure, the OPEC+ is expected to reverse the production cuts implemented last year in order to lift the crude oil price from rock-bottom values; the cuts were substantial. If they restore the cuts, the JTC of the OPEC+ argues, there will be a surplus during the early part of 2022 that could prevail throughout the year – an anxious scenario for the producers. The nu

OPEC+ expresses concern over the demand: China admits its economy suffered in August

  Although China managed to control the outbreaks of the Delta variant of the Covid-19, it could not mitigate the impact on the economy during the period from July to August. The latest data from the National Bureau of Statistics of China, released on the eve of the latest OPEC+ meeting,  clearly shows the manufacturing activity picked up at a very slow rate in August – for the fifth month in a row. Chinese economists blamed it on two factors: the unexpected outbreaks of the Delta variant in major Chinese cities that resulted in them being in long lockdown; the rise in raw materials, exacerbated by the increasing crude oil prices. China uses PMI, Purchasing Manager’s Index – along with other universal measures – to gauge its economic activities, with 50-point-mark demarcating the border between the growth and contraction. The PMI for the manufacturing sector in August was just 50.1, a drop of 0.3 points from that in July. The PMI for non-manufacturing sector, meanwhile, recorde

Hurricane Ida downgraded: crude oil markets slowly react to the news

  The price of crude oil recorded a slight fall on Monday, perhaps at the news that the Hurricane Ida, which had been battering the US Gulf Coast on Sunday, has finally been downgraded to a tropical storm. Although the strong winds can still cause mayhem, the impact on the ordinary lives appears to be gradually receding. It is true that the major oil companies moved their staff away from the facilities as the tropical storm evolved into a category-4 hurricane and the production suffered to some extent. Sensing a major disruption to the crude oil supply, the markets reacted in an understandable way – elevating the price. As the feared destruction did not take place, however, the price of crude oil just fell in the early hours on Monday morning. As of 11:30 GMT, the price of WTI and Brent were $68.29 and $72.53, recording a loss of 0.76% and 0.30% respectively. It was a modest fall, though. Facing the new development in the aftermath of the Hurricane Ida, analysts are eagerly a

Amazing recovery of the price of crude oil

The price of crude oil has been rising for the whole week, having suffered a 15% loss in the first three week in August.  The fall of price by almost $11 a barrel made some pundits predicting a new crash, something that did not materialise. One of the main factors that sent the price of crude oil on a downward spiral was the concerns about the health of the Chinese economy, coupled with the new outbreaks of the Delta variant of the Coronavirus. As for the new wave of the pandemic in certain Chinese cities, the authorities appeared to have contained the spread successfully. Unlike the Western countries, China uses iron-hand measures to keep the threat at bay and it often works. Even during the first wave of the pandemic, that was the case as far as China was concerned, despite it being the epicentre of the global catastrophe. In proportion to the success on the ground, the major Chinese cities are limping back to economic activities, with the new-normal being on the horizon. Tha

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