International oil prices fell sharply for two consecutive days, approaching the lowest point of the year, and Russia’s oil price restraint measures were ignored
December 7 Financial Associated Press News (Edited by Shi Zhengcheng)As 2022 draws to a close, crude oil, which has been swinging wildly for an entire year, has quietly hit a year-long low after two consecutive days of steep declines this week.
As of press time, both Brent oil and WTI crude were down more than 4%. Among them, Brent oil fell below the $80 mark, a new low since January 4 this year, while crude US fell directly below the low point for the year.
(Oil on Canvas vs. US Oil Daily Chart, Source: TradingView) In fact, prior to the start of this week,Crude oil market expectations are more focused on supply reduction after the implementation of new Russian oil sanctions, but the sharp decline for two consecutive trading days also shows a sudden change in the market’s trade sentiment。
Eli Tesfaye, market strategy analyst at RJO Futures, explained:The sentiment in the market is becoming increasingly negative. According to the current progress, WTI crude oil is gradually heading towards the $60 handle. The next $80 will be the new resistance level, it will be a surprise if it is broken。
While there have been many events related to the crude oil market over the past couple of days, it is difficult to attribute the decline to a single factor.
First, with US economic data strengthening on Monday and expectations of a more aggressive and sustained interest rate hike from the Federal Reserve, global risk assets have been in a precarious state over the past couple of days and the Nasdaq is dropped nearly 2% for two consecutive days. For crude oil, which is priced in dollars, a stronger dollar means higher energy costs, which will naturally dampen demand.
Next week, the Federal Reserve will hold its last interest rate meeting this year, and the market generally expects the FOMC to continue adding a 50 basis point weight to the balance of suppressing the economy. Stubborn inflation has also clouded the outlook for next year’s economy, further weighing on sentiment for risky assets.
As for the G7-imposed measures to cap Russian oil prices, the sharp decline over the past two days clearly reflects market sentiment. On the one hand, the current price cap of US$60 is not in itself an obstacle to limiting Russian oil exports or production. On the other hand, the European Union and the United States have also granted the crude oil market a transition period of 45 days, as long as the end user can receive the goods before January 19 next year.
What makes the market even more ridiculous is that most of the world’s oil trade is calculated in fluctuating forward prices, which also means that if the G7 allies want to meet the price cap, they have to buy crude at a fixed price. , which is not very common.
The US Energy Information Administration (EIA) also released its latest near-term energy outlook on Tuesday,U.S. crude production capacity is expected to reach 12.34 million bpd next year, surpassing the record peak of 12.31 million bpd set in 2019. The EIA also lowered the average spot price of Brent oil this year and it is now close to $101 and $92, up from $102 and $95 previously.
