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The "Stay On" Camp: 1. Moodys: Expects the Fed to hold rates steady, with a rate cut unlikely in the short term. Holding rates steady this year is the baseline scenario. If inflation expectations continue to rise, a rate hike may be the next step. 2. Nomura: Expects the Fed to hold rates steady, with a reduced likelihood of a rate cut in the short term. Rates are likely to remain unchanged in 2026. 3. JPMorgan Chase: Expects the Fed to hold rates steady and for the remainder of the year to remain unchanged. The policy stance is likely to shift clearly from accommodative to neutral. 4. Wells Fargo: Expects the Fed to hold rates steady. A rate hike would require evidence of a significantly overheated labor market or a further deterioration in the inflation outlook. It is difficult to find justification for any action at this stage or in the foreseeable future. 5. BNY Mellon: Expects the Fed to hold rates steady. The statement is expected to suggest two-way risks to interest rates. The Fed is expected to remove its 2026 rate cut expectations, and there will be no rate cuts or hikes this year. Rate Cut Camp: 1. Goldman Sachs: Expects the Fed to hold rates steady and likely removes its previous forward guidance hinting at rate cuts; short-term rate hikes are unlikely, with rate cuts expected in June and December 2027. 2. UBS: Expects the Fed to hold rates steady and likely to formally abandon its dovish stance; still believes the Feds next move will be rate cuts, with 25 basis point cuts expected in March and June 2027. 3. Citigroup: Expects the Fed to hold rates steady, but with easing tensions in the Middle East driving down oil prices and a weakening labor market, expects the Fed to cut rates by 25 basis points in September, October, and December. 4. Commerzbank: Expects the Fed to hold rates steady and likely abandons its dovish language. Rate cuts are expected to begin around mid-next year, accumulating to 75 basis point cuts by the end of 2027. Rate Hike Camp: 1. Capital Economics: Expects the Fed to hold rates steady, with a high probability of two "insurance rate hikes" in December and early next year. 2. BNP Paribas: Expects the Fed to raise rates little before the November midterm elections, with the first rate hike likely in December at the earliest, and at a more moderate pace than in 2022. 3. Deutsche Bank: Expects the Fed to hold rates steady, maintaining its baseline assessment of keeping rates unchanged for the long term, but the risk of future rate hikes is rising. 4. PGIM: Expects the Fed to hold rates steady, with three rate hikes this year to curb overheating, three rate cuts in 2027, and one more in 2028, ultimately reaching a rate of 3.375%. Others: 1. Barclays: Expects the Fed to hold rates steady, with forward guidance wording likely to be removed from the statement to reduce implications for future rate cuts. 2. Bank of America: Expects the Fed to hold rates steady, with the statement likely to remove any mention of an accommodative bias and potentially adjust its description of job growth. 3. ANZ: Expects the Fed to hold rates steady, with the statement likely to remove any accommodative wording and reaffirm its commitment to achieving its 2% inflation target. 4. Mitsubishi UFJ: Expects the Fed to hold rates steady. The upcoming FOMC meeting is crucial, not because of policy changes, but because of forward guidance. 5. Investment management firm MFS: Expects the Fed to hold rates steady, potentially indicating a neutral monetary policy stance. Warsh may also make some changes, such as ceasing the use of the dot plot and reducing press conferences.Indonesias Ministry of Trade: From the demand side, global gold purchasing activity has slowed down due to continued volatility in international financial markets.The China Earthquake Networks Center officially reported that a magnitude 3.6 earthquake occurred at 13:11 on June 17 in Haixi Prefecture, Qinghai Province (37.86 degrees north latitude, 95.54 degrees east longitude), with a focal depth of 10 kilometers.According to a Reuters poll, 22 out of 35 economists expect the Indonesian central bank to raise its 7-day reverse repo rate by 25 basis points to 5.75% or higher on June 18.According to a Reuters survey, the Indonesian central banks 7-day reverse repo rate is expected to be 5.75% by the end of 2026 (previously expected to be 5.50%).

Analysis of Factors Affecting Crude Oil Price

Alyssa Hertig

Oct 25, 2021 13:27



一． Crude oil demand

1. crude oil demand is positively correlated with the global economic growth. Novel Coronavirus pneumonia has been affected by the recent outbreak of the global economy, factories have shut down and oil demand has fallen sharply, resulting in the fall in crude oil prices from the initial $70 to the current $22.

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2. The cost of alternative energy will determine the upper limit of oil price. When the price of oil is higher than the cost of alternative energy, consumers will tend to use alternative energy. At present, the cost of shale oil production in the United States is $40-$50, and the cost of crude oil production is less than $10.

3. The data of crude oil demand mainly depends on the oil demand of the United States and other large industrial countries, such as monthly industrial output rate, manufacturing PMI value, etc.  The financial calendar can be viewed on Top 1markets official website or Top 1markets APP for the latest economic data.

 

二． Crude oil supply

1. Oil supply must be based on oil reserves. The International Energy Agency predicts that the world oil production had reached its peak in 2015, and the global oil supply has gradually entered a declining stage.

2. At present, the suppliers of the world oil market mainly include the organization of Petroleum Exporting Countries (OPEC) and non OPEC countries. OPEC has most of the world's proven oil reserves, and its production and price policies have a significant impact on the world's oil supply and price. The non OPEC countries, mainly led by Russia, adjust production according to prices. On March 7, at the OPEC meeting, Saudi Arabia and Russia failed to reach an agreement on the oil production reduction plan. Saudi Arabia said it would increase production. Once the news came out, the price of crude oil plummeted on that day from$42 to $32.

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3. At present, the impact of supply is mainly quantified by EIA crude oil inventory in the United States, API crude oil inventory and the output of some large international oil exporting countries.

 

三． US dollar index

Crude oil price has always been closely linked with the US dollar, and its delivery and pricing are settled in US dollar, so the US dollar index will also have an impact on crude oil price. There is a certain inverse correlation between the change of oil price and the change of US dollar index. For example, if the U.S. dollar continues to depreciate and the real income of oil products priced in US. Similarly, if the US dollar appreciates, the oil price will be lowered. During the period of US dollar appreciation from 2013 to 2016, crude oil prices showed a trend opposite to it.

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四． Conflict

Geopolitics is one of the important factors that can not be ignored. In geopolitics, revolutions or riots at home and abroad in the world's major oil producing countries, wars in the Middle East, including terrorist riots around the world, will have a significant impact on oil prices. These are clearly reflected in the historical oil price chart.

Such as the events of “911” in 2001 in the United States and military action against Iraq by United States led to a rapid contraction in Iraq's crude oil production. Brent crude rose 100% from $30 a barrel before 911 to $67 a barrel in September 2005.

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