On November 2nd, international crude oil futures ended their three consecutive declines and saw a rebound. The settlement price of the main contract for WTI crude oil futures in the United States was $82.46/barrel, an increase of $2.02 or 2.5%. The settlement price of the main contract for Brent crude oil futures was $86.85/barrel, an increase of $2.22 or 2.6%. The main reason is that the Federal Reserve maintains interest rates unchanged, reducing future demand pressure, and increasing risk appetite.
Both the Federal Reserve and Bank of England interest rate decisions remain unchanged
The US Federal Reserve/Fed faced a dilemma during its two-day policy meeting this week, as it sought to suppress an overheated economy while preventing financial market risks while also meeting the goal of reducing inflation. Finally, the Federal Reserve held its benchmark interest rate unchanged at 5.25% -5.50% on Wednesday.
At the same time, the Bank of England also issued the interest rate resolution. According to sources, the Bank of England held its latest meeting on Thursday to maintain interest rates at 5.25%, which is currently a 15-year high. This is the second consecutive month of interest rate stability after 14 rate hikes.
Once the Federal Reserve suspended interest rate hikes, market risk appetite returned, asset prices rose, and bulk crude oil ended its three consecutive declines, benefiting from the upward trend. At the same time, oil investors have been closely monitoring the implementation of the Federal Reserve's interest rate policy, and the market is concerned that a radical rate hike may drag down the economy and weaken energy demand. This unchanged interest rate also alleviates market concerns.
OPEC+ oil producing country maintains production reduction scale, Saudi Arabia continues to reduce production until December
OPEC+ leader Saudi Arabia voluntarily reduced production by 1 million barrels per day for the first time in July. Subsequently, in order to balance oil prices, the voluntary production reduction policy was extended and finally extended until the end of the year, and the decision was reviewed monthly. The latest news shows that analysts believe that Saudi Arabia will continue to reduce production in December, and it is possible to continue the production reduction policy next year. As global economic uncertainty increases and oil demand slows down, Saudi Arabia's future production control policy will still lean towards aggressive production cuts.
Tensions in the Middle East exacerbate supply concerns
The market continues to pay attention to the development of the situation in the Middle East region. Currently, the oil producing areas where the war has not yet expanded, but the heat of the conflict is still high. Currently, Israel has launched a ground attack on Gaza. On Thursday, the advance of Israeli tanks and military teams encountered fierce resistance from Hamas militants. In addition, the Hussai armed forces have launched a crackdown on Israel, and the market is concerned about the potential escalation of conflicts in the future. The expectation of tight crude oil supply remains unchanged.
On a macro level, the October non farm employment report on key economic data in the United States will be released on Friday evening, and the market is expected to add 180,000 new jobs in the United States that month; The average hourly salary for October is expected to increase by 0.3%. This may make the US dollar stronger and have a certain inhibitory effect on oil prices. However, from the perspective of supply and demand, the supply tension has not improved, mainly due to concerns in the Middle East region, and the risk of oil supply has not yet been lifted. The demand side will be dragged down by the economic outlook. The future game between supply and demand will intensify. Overall, oil prices will remain high and volatile in the near future, and the amplitude may continue to expand.
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