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On September 18th, former U.S. Treasury Secretary Larry Summers stated that the Federal Reserves policy is leaning toward being "too accommodative," and emphasized that the biggest risk facing the U.S. economy lies in inflation, not the job market. Summers stated, "If I were in Chairman Powells shoes, my biggest concern would certainly be inflation." Regarding the Feds interest rate cuts, Summers said, "I dont think theyre being forced to do so by political pressure, but I do think that at this moment, the (Fed) must be pulling out all the stops (to maintain an anti-inflation stance). And Im not sure theyve pulled out all the stops as Id hoped."On September 18th, British Chancellor of the Exchequer Reeves stated that the government is exploring measures to reduce inflation and will announce them in the next budget in November. In a correspondence with Bank of England Governor Bailey, Reeves described current inflation as "excessively high," adding, "The Prime Minister and I are both clear that we must do everything in our power to control costs and reduce spending." Regulations require written communication between the Chancellor and the Bank of England Governor when inflation deviates by more than one percentage point from the 2% target. The Bank of Englands forecast indicates that inflation is currently at 3.8%, above the 2% target, and is expected to rise to 4% next month. On Thursday, the day of the Bank of Englands monetary policy meeting, the Monetary Policy Committee voted 7-2 to maintain interest rates at 4% to continue to curb price increases.The U.S. Philadelphia Fed Manufacturing Shipping Index was 26.1 in September, compared with 4.5 in the previous month.The Philadelphia Feds manufacturing price index in the United States was 18.8 in September, compared with 36.1 in the previous month.The US Philadelphia Fed Manufacturing Index in September was 23.2, expected to be 2.5, and the previous value was -0.3.

Supply continues to be tight! Upside potential for oil prices is still huge

Oct 26, 2021 10:58

U.S. oil prices have risen for five consecutive days recently and have reached the highest level since 2014. The world is concerned about energy supply, and there are signs of tight supply in crude oil, natural gas and coal markets.


Two days ago, OPEC+, formed by the Organization of the Petroleum Exporting Countries (OPEC) and the oil-producing allies headed by Russia, stated that it would adhere to the existing agreement and gradually increase oil production, rather than further increase production. The Biden administration had previously called on OPEC and its allies to increase oil production in response to soaring gasoline prices. India, another major oil consumer, also called on OPEC to consider increasing supply to ensure that prices are suitable for producers and consumers.

Kieran Clancy, a commodity economist at Capital Economics, believes that OPEC+ is under increasing pressure, but their refusal to expand production means that the market is still in deficit in the fourth quarter, indicating that oil prices will remain at least this year. It will remain high for a while.

The Commonwealth Bank of Australia (CBA) wrote in a report: "OPEC's outlook indicates a further reduction in global oil inventories. Given that oil inventories are already low, this is a problem."

They said that as the vaccination rate rises to support the reopening of the economy, the global demand for crude oil has accelerated, and rising oil prices may threaten the recovery of the global economy.

ANZ Bank said in a report: “Crude oil has expanded its gains because investors are worried that the energy crisis will push up demand and market supply is tight. Considering the global energy shortage, OPEC+'s growth rate is much lower than market expectations. Not surprisingly, people It is speculated that if demand continues to surge, OPEC will be forced to take action before the next scheduled meeting."

Prior to the arrival of the winter heating season, global supply continued to be tight, with natural gas futures prices rising by more than 9% on Tuesday, the highest closing price in nearly 13 years.

Schneider Electric's global research and analysis manager Robbie Fraser said that as the global crude oil market has been in short supply, record natural gas prices in major demand regions will lead to a strong increase in heating demand for products such as diesel and fuel oil, which will eventually support a further decline in crude oil and product inventories. , Now crude oil and product inventories are far below the normal level at this time of the year.

FxPro senior market analyst Alex Kuptsikevich said that in the past 7 weeks, oil prices have risen almost uninterruptedly. During this period, they have risen by more than 25%, but this does not mean that the upside potential has been exhausted, because most of the gains have come from deep corrections. . The kinetic energy of oil lags behind that of natural gas and coal, so it may have huge upside potential.

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