Oil trading alert: Delta wreaks havoc around the world, OPEC+ may open all valves

U.S. crude was up slightly in Asia on Monday, hovering around 74.30. Oil prices climbed to their highest level since October 2018 on Friday, with two benchmark crude prices rising for a fifth straight week on expectations that demand growth will outpace supply  that the Organization of Petroleum Exporting Countries  its Allies, OPEC+, will be cautious about putting more crude on the market starting in August.

Focus on the day New York Fed President William Williams speech

Affect oil price positive factor

[The S&P 500 rose for the second day in a row  market volatility returned to pre-outbreak levels]

U.S. stocks closed Friday higher for a second straight session. Volatility fell sharply in the week that just ended, with stocks of companies closely linked to an economic recovery gaining traction. U.S. Treasurys fell sharply. The S&P 500 closed up 0.3% on Friday, led by a 15.5% rally in Nike. It may be too early to say the reflation trade is fully back, but at least some of the anxiety about the Fed's hawkish turn has eased. For now, there is a perception that Fed officials are in no rush to raise interest rates despite mounting inflationary pressures.

Data on Friday showed that personal spending stagnated in May, while a closely watched measure of inflation continued to climb. Meanwhile, US consumer confidence rose less than expected in June, long-term inflation expectations fell  the previous month  shares of some big banks rose on Friday as investors speculated about a wave of dividend payouts  share buybacks following the Fed's stress test results.

China's May profits for industrial enterprises above designated size rose 36.4% year on year

China's National Bureau of Statistics said on its website that industrial profits at  above designated size totaled 829.92 billion yuan in May. In the January-May period, the profits of industrial enterprises above designated size rose 83.4 percent year on year to 3.424.74 billion yuan.

The National Bureau of Statistics (NBS) said that in general, the economic performance of industrial enterprises continued to recover steadily in May, but the imbalance of corporate profits was relatively prominent,  the recovery foundation was  solid.

First, due to the impact of rising commodity prices  other factors, the new profits of industrial enterprises are mainly concentrated in the upstream mining  raw material manufacturing industries, while the cost pressure of the downstream industries is increasing. Second, the profit growth rate of small  micro enterprises is lower than that of large  medium-sized enterprises,  the profit growth rate of private enterprises is lower than the average level of industrial enterprises above designated size. In the next stage, we will fully implement the decisions  arrangements of the CPC Central Committee, implement macro policies in a scientific  precise manner, continue to promote reform  innovation, stimulate the vitality of market entities, help enterprises solve difficulties, guide commodity prices to return to the fundamentals of supply  demand,  promote a sustained  stable recovery of the industrial economy.

[Iran's deputy foreign minister calls for 'tough decisions' on Iran nuclear deal]

Iran's deputy foreign minister  chief negotiator for nuclear talks, Mohammad Ali Araghi, said Tuesday that Iran had made tough decisions in order to save the JCPOA,  now it needs other parties to make tough decisions.

Araghi met with members of the Iranian parliament's National Security  Foreign Policy Committee. In an interview with Iran's Islamic Parliament news agency after the meeting, he said Iran made a "major  difficult decision" to stay in the nuclear deal when the United States pulled out.

He said that relevant parties to the Iranian nuclear agreement have held six rounds of talks on the resumption of the implementation of the treaty by the US  Iran,  had "full discussions" on some outstanding issues,  the negotiations have "almost entered the final stage". Now it is time for the other parties concerned to make "tough decisions" based on the negotiations that have taken place.

Iranian Foreign Ministry spokesman Mohammad Khatibzadeh said on Tuesday that Iran still believes a consensus is possible if the US side abandons the "failed legacy" of former US President Donald Trump. He also stressed that Iran will  negotiate indefinitely.

Iran will  hand over video surveillance data of Iran's nuclear facilities to the IAEA as the interim technical agreement reached between Iran  the International Atomic Energy Agency (IAEA) expires, Iranian parliament member Mohammad Qalibaf said on Tuesday. Iran will continue to keep video surveillance data of Iran's nuclear facilities in the past 4 months.

OPEC+ may  open all valves

Demand continues to rebound  the market expects OPEC+, which meets this week to discuss output policy, to increase output only slightly, said Bart Melek, head of commodity strategy at TD Securities in New York. "OPEC+ is  going to open all the valves  flood the market with oil  cause a crash, at least in my view," Melek said.

Inventories have fallen sharply as fuel consumption rebounds in key oil-producing regions such as the US  Europe. The prospect of Iranian oil flooding the market is diminished by the stalemate in nuclear talks. The bullish macro backdrop has led to expectations that Brent crude could eventually reach $100 / barrel.

JPMorgan raised its forecast for global crude oil demand in 2021 by 200,000 BPD, with most of the growth coming  China,  expects U.S. demand to remain strong through September.

Rich Dvorak, an analyst at DailyFX, said much of the recent rise in oil prices was due to the surge in oil demand as major economies accelerated the easing of restrictions on outbreaks over the summer. Progress in talks on an Iran nuclear deal also appears to have hit a snag, reducing the threat of Iranian oil flooding the market. A combination of falling volatility  seasonal factors also provides bullish tailwinds. While market voices are calling for Opec + to increase supply, the likelihood of a significant increase is low, as Saudi Arabia's energy minister recently spelled out the risks to oil prices  added the need for caution.

Even if OPEC starts to increase production in August  beyond, the market will be tight between now  Labor Day, Goldman Sachs said.

Fueled by the U.S. holiday driving season, global fuel consumption exceeded supply by 3 million b/d. This shortage of supply means fuel stocks around the world are running down rapidly,  whatever the outcome of the OPEC + meeting seems unlikely to be enough to shake the market's near-term uncapped demand.

ANZ analysts forecast OPEC+ will modestly increase supply by 500,000 BPD in August, after previously agreeing to increase by 2.1 million BPD between May  July. A U.S. official said the two sides remain sharply apart on a range of issues related to Iran's compliance with the 2015 nuclear deal. Sanctions on Iran have been lifted, dimming the prospects for more Iranian crude to hit the market in the short term.

The impact of oil prices bearish factors

"Delta" wreaked havoc in 85 countries  regions around the world.

Sydney residents faced a first day of complete lockdown as Australia tried to contain the spread of the Delta variant strain of the deadly virus, AFP said on June 27. The closure of restaurants, bars  cafes brought about by the "home order" in central neighborhoods has been extended throughout the city  the surrounding waterfront  mountainous areas.

Figures released on June 26 in the UK showed that 18,270 new cases were diagnosed in a single day, the highest number since early February. The UK also has the highest rate of infections per million people in the world, ahead of the US  India. The number of new cases on 27 was 14,876.

The New York Times said Wednesday that it raised questions about whether Britain would be able to lift the quarantine as scheduled next month, after the Johnson government had postponed the lifting of the quarantine  June 21 to July 19. On the 26th, anti-vaccine  anti-blockade demonstrations broke out in London, with media estimates saying that the number of people reached tens of thousands  even hundreds of thousands.

In the United States,  the Delta virus has spread almost across the country, the CDC urged those who have  yet completed the vaccine to get a second dose immediately. Some experts say one-dose vaccines such as Johnson's are  effective enough against the virus. The US is focusing on young people, encouraging them to get vaccinated at half the rate of older people.

The Tokyo Olympics have also been affected. Competitors  India, Sri Lanka, Nepal, Pakistan, Maldives  Afghanistan, the six countries  the Delta variant of the virus is endemic, will be required by Japan to undergo tests for the virus every day for seven days before they leave the country, Japanese media reported Wednesday. The relevant regulations will come into effect on July 1.

Overall, the outlook for demand improved,  expected the market supply will still tense,  OPEC + may only slightly increased production of expectations, provides the oil prices rise, the current focus on OPEC + meeting, but the need for vigilance, mutant strain "delta" spread around the world, has made many European extended epidemic measures  blocked, This may be a negative factor for oil prices.

U.S. crude was trading at $74.33 a barrel at 08:03 Beijing time.

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Source: International Petroleum Network