Oil futures contracts fluctuated in a narrow range tilted to the downside during the Asian session, to witness the rebound of the Nymex crude contracts for the second session in three sessions from their highest since October 25, when it tested its highest since October 14, 2014 and the rebound of Brent contracts For the second session in three sessions from the top since October 27.
This comes with the US dollar index rising to its highest since July 22, 2020, according to the inverse relationship between them and on the cusp of developments and economic data monitored today, Friday, by the US economy, the largest producer and consumer of oil in the world, and in the shadows of market pricing for US President Joe Biden’s announcement of his administration’s study To limit the rise in oil prices, which reinforced expectations of resorting to the strategic oil reserves of the United States.
At exactly 04:29 am GMT, the NYMEX crude oil futures contract for December delivery fell 0.27% to trade at $80.99 a barrel, compared to the opening at $81.21 a barrel, knowing that the contracts started the session’s trading on a gap. The price is bearish, after it concluded yesterday's trading at levels of $81.59 per barrel.
Brent crude futures for January delivery also rose 0.54%, to trade at levels of $82.23 a barrel, compared to the opening at $82.23 a barrel, knowing that the contracts also started trading on a bearish price gap after closing yesterday’s trading at $82.64 a barrel. And with the US dollar index rising 0.06% to 95.24 levels, compared to the opening at 95.18 levels.
Investors are currently awaiting the release of a statistical reading of job opportunities and job turnover by the American economy, which may reflect a decline to about 10.02 million compared to 10.44 million last August, and this comes in the wake of labor market data at the end of last week showing a decline in unemployment rates to 4.6 % compared to 4.8% in September, outperforming expectations that indicated a decline to 4.7%.
In the same context, the reading of the employment change index for sectors other than agricultural also showed, last Friday, about 531,000 jobs added, compared to 312 thousand jobs added, which were modified from about 194 thousand jobs in September, outperforming expectations that indicated about 455,000 jobs added, While the average hourly earnings index reflected a slowdown in growth to 0.4%, in line with expectations, compared to 0.6% in September.
This comes before we witness the disclosure of the preliminary reading of the University of Michigan’s consumer confidence index, which may show an expansion to its value of 72.5 compared to 71.7 last October, and the disclosure of consumers’ expectations about inflation for one year and for the next five years, up to the speech of the head of a bank New York Federal Reserve John Williams at a webinar hosted by the Federal Reserve Bank of New York.
It is noteworthy that the inflation data for the largest economy in the world, which was revealed last Wednesday with the release of the US consumer price reading, showed the fastest pace of inflation growth in the United States since 1990 during the last month, which reinforced speculation that the Federal Reserve will tighten the accommodative monetary policy in the era of the epidemic faster. To limit the aggravation of the growth of inflationary pressures, especially after the outperformance of the US labor market data last month.
We would like to point out that US President Joe Biden expressed Wednesday that addressing the flare-up of inflation is a top priority for him and that he asked the National Economic Council of the White House to seek ways to reduce energy costs, and he also asked the Federal Trade Commission to combat any manipulation of markets or prices in the energy sector, This is with his assertion that the independence of the Federal Reserve is indisputable and that the Fed will confirm its independence by taking any appropriate decision.
In contrast, we followed last Tuesday, and the US Energy Information Administration’s report on oil stocks for the week that elapsed on the fifth of November showed that the surplus shrank to about 1.0 million barrels, compared to about 3.3 million barrels, contrary to expectations that the surplus would shrink to about 1.6 million barrels, to witness an increase Inventories are down to 435.1 million barrels, while stocks are still 7% below the five-year average for this time of year.
The report of the US Energy Information Administration at the time also showed a decline in motor fuel stocks in the United States, the largest energy consumer in the world, by 1.6 million barrels, making stocks 4% less than the average of the past five years for this time of year, and distillate stocks decreased by 2.2 million barrels. Inventories are 6% below the five-year average for this time of year.
In another context, we followed last week, US Energy Secretary Jennifer Granholm reported that US President Joe Biden is discussing with his advisers a plan to withdraw part of the strategic oil reserve in response to the OPEC + decision to maintain the production policy as planned despite repeated calls from some major countries On top of that, the United States and India to increase production and curb the rise in prices to support the recovery of the global economy.
Granholm also explained at the time that Biden was concerned about the rise in gasoline prices in America, which might prompt him to withdraw from the country’s strategic oil reserve to revive the oil supply and then put pressure on prices, and this came hours after the end of the activities of the meeting of the Joint Ministerial Monitoring Committee of the Petroleum Exporting Countries OPEC And its allies that produce oil from outside, led by Russia, the second largest oil producer in the world, or what is known as “OPEC +”.
It is noteworthy that OPEC + approved, in its last meeting, which was held last week, to increase oil production by about 400,000 barrels per day during next December, while fixing the oil production policy unchanged, which aims to increase oil production by 400,000 barrels per day every month, as agreed upon in the meeting. From July 18 from early August, the OPEC + cuts since then are estimated at 5.8 million barrels per day, to be implemented until the end of next year 2022.
We would like to point out that the UAE Energy Minister, Suhail Al Mazrouei, said earlier this week in a press conference that fortunately the presence of the OPEC + alliance prevented the doubling of oil prices at least two or three times, despite the fact that Brent crude rose by more than 60% this year thanks to The global economic recovery from the coronavirus pandemic and OPEC+ supply cuts since the beginning of last year.
In the same context, the UAE Energy Minister Al Mazrouei confirmed last Monday what his Saudi counterpart, Energy Minister Prince Abdulaziz bin Salman previously stated, that the oil market is much calmer than the natural gas and coal markets, which is that gas prices have more than doubled in Europe and Asia this year. Uncle is amid severe shortages, causing soaring electricity costs and hitting economies from China to India.
Al Mazrouei also noted, "If OPEC + does not exist, you will see something similar to what happened with gas and coal, and the OPEC + alliance is coordinating to achieve balance in the market," adding that the alliance should remain cautious because the oil market will turn into a surplus during the first quarter of next year. He explained that the consequences of the pandemic are still strong in some countries, and therefore we have to be careful, balance and make sure that only the required quantities are produced.
The Emirati Minister Al Mazrouei stated that OPEC + will not hesitate to meet and discuss the situation in a new emergency, stating, “A phone call separates us from each other,” noting that the OPEC + decision last week was unanimous and that no member suggested increasing daily production by more than 400 thousand. barrels a day, blaming high gas and coal prices on governments discouraging investment in fossil fuels and shifting the transition too quickly to renewable energy.
On the other hand, we watched on Wednesday the US State Department’s announcement of its intention to resume Iranian nuclear negotiations by November 29, nearly five months after the last meeting of the parties to the 2015 Iranian nuclear agreement, according to which Iran dismantles its nuclear program and opens its facilities for more international inspections. In return for easing sanctions on it, especially the freezing of its oil exports, which will return to the markets in the event of an agreement being reached.
On the other hand, we followed Friday the announcement of the American company Pfizer in a press release that its new experimental drug that can reduce the risk of death from the Corona virus 89% and that it intends to register 2,660 people to participate in the last stage of the study, and this comes as Pfizer is ready to apply to the Food Agency And the US Drug Administration to obtain the necessary licenses for the experimental drug for the coronavirus, which will be given to infected people in the form of tablets.
In the same context, we also followed Friday, Pfizer Board Member Scott Gottlieb expressed his expectations for the end of the Corona pandemic in the United States, with the entry into force of the decision of US President Biden to impose vaccinations among employees in the workplace by the fourth of January, adding that the decision Which will apply to any company with more than 100 employees, will make 84 million workers in the private sector have to receive a second dose of vaccines.
Other than that, according to the latest figures issued by the World Health Organization, which were updated yesterday Thursday at 06:19 pm GMT, the number of cases infected with coronavirus has risen to more than 251,266 million infected cases and 5,070,244 people have died, while the number of vaccine doses given according to For the latest update by the organization until yesterday, more than 7,160 million doses.
Otherwise, the markets are still pricing expectations of strong demand for oil in exchange for China and the United States to resort to pumping its strategic stocks of gasoline and diesel, especially after the Chinese National Food and Strategic Reserves Administration reported in advance that the liberation of fuel stocks aims to reduce the energy crisis that the country is going through and to support price stability. in several regions.
This comes in the shadow of the global energy crisis due to the natural gas crisis in Europe on the verge of winter and the thermal coal crisis in China, which led to a crisis in electricity generation there, given that 70% of power plants in China depend on coal, whose production has declined due to pollution control restrictions. Environmental and global warming, and China's freezing of coal imports from Australia to strain relations between the two countries.
We would like to point out, because the weekly report of Baker Hughes, on Friday, showed a decrease in drilling and oil drilling rigs operating in America by 6 rigs to 450 rigs, to reflect the largest weekly increase since mid-October and the highest since April 2020, and a rise of 224 rigs for a year In contrast, US oil production last week witnessed stability at 11.5 million barrels per day, unchanged, at its highest level in two months.
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