The hottest U.S. economy is on the brink of recess

  • Detail

The U.S. economy is on the brink of recession, and the crude oil futures market lacks direction

in the past week, market participants have focused on the U.S. presidential election, and the emerging news has sent a vague signal on the possible direction of the market in the next step

the U.S. economy is on the brink of recession

the short-term news is still bad. The first news is that the U.S. Bureau of Economic Statistics announced that the U.S. economy contracted by 0.3% in the third quarter, the largest decline in seven years. Economists define economic recession as two consecutive quarters of negative growth, so technically, the U.S. economy has not fallen into recession. However, industry analysts expect a larger decline in the fourth quarter, which will officially plunge the economy into recession

more importantly, us personal consumption expenditure fell by 3.1%, the first decline in 17 years, while government spending increased significantly. The latest economic data from the United States has shaken any confidence that oil demand will recover in the short term. UBS group is easier to "lock in" the vision of consumers. Jan Stuart, an energy analyst at UBS, said in a report: "it seems that the price of the oil market has reflected the factors of the long-term deep recession, which will hit the growth of oil demand this year and next. Although we still believe that the credit crisis has amplified the real change in the trend of oil demand." Affected by the trend of the US dollar and the stock market, the oil futures market has experienced substantial fluctuations

as there is no sign that demand will recover in the short term, Venezuelan oil Minister Rafael Ramirez issued a statement on October 30, saying that OPEC will consider cutting crude oil production again at its meeting in Algeria in December. In addition, the new round of production reduction will exceed 1million barrels/day. Ramirez also said that OPEC was considering setting a new price range for its crude oil in an attempt to prevent further sharp price fluctuations. The two price ranges currently under consideration are $70 to $90/barrel and $80 to $100/barrel. The next OPEC meeting is scheduled to be held on December 17. The cartel held an emergency meeting in Vienna on October 24 and decided to reduce production by 1.5 million barrels per day from November 1. OPEC said that as demand is expected to decline this year and 2009, action is needed to eliminate excess supply

the reduction of investment by oil producing countries has led to the bullish input price of 9-way switching volume of oil in the long term

in sharp contrast to the bearish outlook driven by demand in the medium term, there are increasingly signs that the upcoming supply constraints will drive prices soaring in the longer term. The financing urgently needed for projects to increase long-term oil production capacity is facing a credit crunch; The current market environment with weak prices has led to a decline in the return on investment or even completely unprofitable. The combination of the above two factors will lead to tight supply

in fact, for unconventional oil projects that require higher oil prices to achieve balance of payments, producers have reduced investment plans. For example, according to Wall Street this week, shell has postponed making a decision on expanding its Canadian oil sands business. Industry sources estimate that the break even point of oil sand development projects with higher difficulty is $80 to $90/barrel, while conventional oil exploitation requires a price of $60 to $70/barrel

even Saudi Aramco, the world's largest producer and the lowest production cost of almost all companies, said last week that it would likely delay investment in new capacity

Beijing think tank: oil prices are expected to top $80 to $100

at the "World Forum on energy and finance and the third annual meeting of Chinese mayors of finance" held in Beijing this week, there was also talk that world oil prices will rise. Dongxiucheng, deputy dean of the school of Business Administration of China University of petroleum, said at the forum that he expected oil prices to rise to $80 to $100/barrel in the coming months. He said: "despite the current global economic recession, I predict that the oil price will continue to fall endlessly in less than 6-12 rough months. I think the oil price will probably rise to the range of $80-100/barrel." Dongxiucheng proposed three factors to support the long-term rise in oil prices: the dollar has weakened again; Oil producing countries will be forced to defend their bottom line prices; And speculative funds transferred from oil to other commodities

as the international oil price is denominated in US dollars, the depreciation of the US dollar supports oil prices in two ways. On the one hand, the depreciation of the US dollar prompted oil exporting countries to increase the nominal price to compensate for the decline in the calculated value of the US dollar. At the same time, the weakening of the US dollar means that the import cost in terms of the currency of the importing country decreases, thereby creating room for consumption to increase. Although the global financial crisis has stimulated some consumer countries to call on [China Plastics News] to abandon dollar pricing internationally, forum representatives said that this situation is unlikely to occur in the short term. Even if changes occur, they may be limited to individual bilateral agreements. A representative said during the Forum: "China and Russia are discussing pricing in their own currencies, but this is related to China's generous loans."

Dong Xiucheng also said that the oil production Congress would do everything possible to keep the oil price within his acceptable range. Ensuring oil prices is not only to safeguard the national interests of oil producing countries, but also because the economies of oil producing countries are related to the volatile fluctuations of the global oil market, and the social systems of these countries are also closely linked to oil. Dong Xiucheng also predicted that speculation would shift from oil to other commodities or assets with higher returns, thereby supporting oil prices. In the process of bear market, speculators' short selling has amplified the downward pressure on oil prices. These people sell short and hope to buy back at a lower price in the future

note: the reprinted content is indicated with the source. The reprint is for the purpose of transmitting more information, and does not mean to agree with its views or confirm the authenticity of its content

Copyright © 2011 JIN SHI