Market Commentary - September 30, 2020
Oil prices dropped again. The crude oil fell more than 5% during the day to 38.57 US dollars per barrel while Brent oil fell more than 4% to 41.11 US dollars per barrel. Vitol Group, the world's largest crude oil trader, said that due to the new round of lockdown measures triggered by the epidemic, the recovery of global crude oil demand has slowed, and there is limited room for oil prices to rise in the fourth quarter.
Vitol Group Executive Committee member Chris Bake said that before entering the fourth quarter, the market originally expected oil demand to improve, but now demand has become more uncertain. He said that the demand for refined oil products is weak and there are large inventories.
The Organization of the Petroleum Exporting Countries (OPEC) and crude oil producing countries including Russia reached an agreement on production cuts in April, prompting a rebound in international oil prices. However, there have been no major moves to boost oil prices. The price of Brent oil still has fallen by 30% year-to-date.
Figure 1 (Source: IS Prime): SPT.CO.US 1-Year Chart
Headliner to Review
US CB Consumer Confidence increased sharply from 84.8 in August to 101.8 in September, highest reading since March but it remained below pre-pandemic level. Consumer President Situation Index rose to 98.5 from 85.8 while Consumer expectations index jumped from 86.6 to 104.
Goods trade balance decreased from -80.1 billion to -82.9 billion. It showed the trade deficit in goods widened in August, with imports surging as businesses rebuild inventories which were depleted early in the pandemic.
China Manufacturing PMI increased from 51.0 to 51.5 while Non-Manufacturing PMI increased from 55.2 to 55.9. PMI readings above 50 indicate expansion, while those below that signal contraction. The strong data was due to the simultaneous recovery of both supply and demand.
Headliner to Watch
ECB President Lagarde will speak during EU hours.
For the US data, ADP Non-Farm Employment Change expected to change from 428k to 650k. Final GDP q/q expected to remain at -31.7%. Chicago PMI expected to increase from 51.2 to 52.0. Pending Home Sales m/m expected to decrease from 5.9% to 3.1%.
Crude Oil Inventories expected to increase from -1.6M to 1.0M.
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Topics: Market Commentary