Crude Oil Trading Alert: The US only has 25 days of diesel supply! Surge in demand supports oil prices

At the beginning of the Asian market on Thursday, October 20, U.
S.
oil traded near $84.
76 / barrel; Oil prices rose more than 2.
5 percent on Wednesday as caution about tighter supply offset uncertain demand and the negative impact of the U.
S.
from releasing more crude from its reserves, with U.
S.
crude inventories unexpectedly falling last week and U.
S.
diesel demand surging, while the U.
S.
had only 25 days of diesel supply, the lowest
since 2008.

The focus of the day is on the number of initial jobless claims in the United States for the week ended October 15, and the speeches of Fed officials; NYMEX New York crude oil November futures are affected by the transfer of positions for months, the last transaction on the floor is completed at 2:30 on October 21, and the final transaction of the electronic disk is completed at 5:00 am, please pay attention to the announcement of the expiration of the trading venue for the month to control the risk
.
In addition, the expiration time of US oil contracts on some trading platforms is usually one day earlier than the official NYMEX, please pay more attention
.

Negative factors affecting oil prices

[Fed Beige Book says businesses are more pessimistic about the outlook]

The Fed said in its Beige Book report on Wednesday that U.
S.
economic activity has expanded modestly in recent weeks, while some regions have stagnated and several others have declined, suggesting businesses are increasingly pessimistic
about the outlook.
In addition, the Beige Book notes that inflationary pressures have eased and are expected to continue to ease, a key "soft data" that suggests that aggressive Fed rate hikes may have begun to reverse inflationary trends
.

[Biden announced that he will release another 15 million barrels of oil reserves to fight high oil prices before the midterm elections]

US President Joe Biden announced a plan to sell 15 million barrels of crude oil from the nation's emergency reserve and begin replenishing reserves in an attempt to curb soaring gasoline prices
ahead of the Nov.
8 midterm elections.
Biden also said that the Strategic Petroleum Reserve
will be replenished in the coming years.
He is currently under criticism from Republicans, who accuse him of tapping into reserves
for political reasons rather than emergencies.

[U.
S.
housing starts fell more than expected in September]

U.
S.
housing construction fell 8.
1% in September, a more than expected decline; New single-family home starts fell 4.
7 percent to an annual rate of 892,000 units, the lowest level in more than two years, suggesting the continued impact
of the Fed's rate hikes on the housing market.

[Rising U.
S.
bond yields overshadow the impact of good corporate performance, U.
S.
stocks close lower]

U.
S
.
stocks ended Wednesday with two straight gains to close lower as Abbott shares moved lower and U.
S.
Treasury yields rose, dampening momentum from the current earnings season and overshadowing the boost from Netflix's soaring share price.

U.
S.
10-year yields hit their highest in more than 14 years as weak housing data did little to change expectations
that the Fed would continue to raise interest rates aggressively.
Rising yields weighed on interest-rate-sensitive stocks, such as real estate stocks, which fell 2.
56 percent, the worst performing S&P sector of the day, while large growth stocks such as Microsoft and Amazon were also affected
.
Energy stocks were the only S&P sector to rise, up 2.
94%; Abbott plunged 6.
5 percent after the company reported weaker-than-expected
growth in international medical device sales.

However, Netflix shares jumped 13.
1% to become the best-performing S&P 500 constituent, after the company reported attracting 2.
4 million new users worldwide in the third quarter, more than double its estimate, and the company expects to add 4.
5 million users
by the end of the year 。 JJ Kinahan, chief executive of IGNorthAmerica, said, "The impact of the bond market is so great that it's a shame to see good quarterly reports go to waste, at the end of the day it will be performance that drives the stock market, but when they are overshadowed by other factors, it's hard to generate optimism, but ultimately good earnings will push stocks higher, and the question is to what extent the macroeconomic situation will continue to hurt corporate earnings
.
" ”

Fed officials in public comments have largely agreed
on the need for aggressive rate hikes to address inflation.
Minneapolis Federal Reserve Bank Chairman Neel Kashkari said on Wednesday that U.
S.
job demand remains strong and core inflationary pressures may not have peaked
yet.

U.
S.
economic activity has expanded modestly in recent weeks, albeit flat in some regions and down in others, the Fed said in a Beige Book report on Wednesday, showing businesses becoming increasingly pessimistic
about the outlook.
The Fed is widely expected to raise interest rates by 75 basis points
for the fourth time in a row at its November meeting.

Data released Wednesday by the Bureau of Labor Statistics showed that U.
S.
housing construction fell more than expected in September, with new single-family home starts falling to their lowest level in more than two years, suggesting that the Fed's interest rate hikes are having an ongoing impact
on the housing market.

The PHLX real estate index fell 4.
50%, another sector unlikely to help the stock market reverse months of losses, with the three major U.
S.
indexes still in a bear market
.

S&P 500 companies' third-quarter earnings growth expectations rose to 3 percent from 2.
8 percent on Tuesday, still well below the 11.
1 percent forecast in early July
, Refinitiv data showed.

Electric car maker Tesla rose 0.
84% before reporting earnings after the close, as the market focused on whether weak demand is starting to have an impact
on the auto industry.
Tesla plunged 3.
94% after hours as the company's third-quarter revenue fell short of expectations
.

There are many factors affecting oil prices

[U.
S.
crude inventories fell 1.
7 million barrels last week]

The U.
S.
Energy Information Administration (EIA) said Wednesday that U.
S.
crude inventories fell last week as refineries were operating above average over the same period, while demand improved
from the previous week.

Crude inventories fell by 1.
7 million barrels to 437.
4 million barrels
in the week ended Oct.
14.
Analysts polled by Reuters had expected an additional 1.
4 million barrels
.

Refineries continue to operate
at high capacity utilization.
Refining fell by 133,000 barrels per day last week, reducing refinery capacity utilization by 0.
4 percentage points to 89.
5 percent
.
That level is still the highest in 19 years, according to the EIA, as refineries ramp up production to make up for low inventories
across the country.

Crude inventories at the Cushing Delivery Center in Oklahoma rose by 583,000 barrels
last week, the EIA said.
U.
S.
gasoline inventories fell by 114,000 barrels
last week.
Distillate inventories, including diesel and heating oil, rose by 124,000 barrels to 106.
2 million barrels
.

Robert Yawger, head of energy futures at Mizuho Bank in New York, said: "With distillates, we have pushed the crisis back at least another week
.
There is a slight increase in inventories, at least we are not at a 17-year low, but that may happen in the coming weeks," the EIA said, adding that net imports of U.
S.
crude fell by 1.
42 million b/d
.

U.
S.
refined products supplies rose sharply, reaching 20.
8 million b/d in the most recent week, although the four-week average still showed demand was 2.
4 percent
lower than a year earlier.

Local time reported on the 19th that the current demand for diesel in the United States surged, while the United States only had 25 days of diesel supply, the lowest
since 2008.
According to the report, diesel is widely used for heating and truck transportation, and the shortage of diesel may further push up prices
.

[U.
S.
says price cap on Russian oil will not be replicated to OPEC producers]

A U.
S.
Treasury official told Reuters that the G7's new measures to limit Russian oil sales at low prices would not be replicated to
OPEC producers.
The official added that the United States has communicated with representatives of the Organization of the Petroleum Exporting Countries (OPEC) to assure them that it will not impose a cap
on oil prices due to its production cut program.
The speech could help ease the dispute
between the United States and Saudi Arabia.

[Putin strengthens Russia's operational layout, and the battle of Kherson in Ukraine is about to break out]

Russian President Vladimir Putin on Wednesday ordered a nationwide effort to support the war in Ukraine, while authorities in Kherson, a strategic hub in the south, are preparing for a mass evacuation in response to the coming fierce fighting
.
Putin announced martial law in four newly annexed regions on Wednesday, and Russian state television footage showed people evacuating in the Kherson region by boat, with Vladimir Saldo, the head of the local government, saying 50,000 to 60,000 people would be evacuated
over the next six days.

Overall, the decline in inventories, the surge in demand boosted oil prices, the measures to impose a price cap on Russian oil will not be replicated to OPEC oil producers, coupled with Putin's strengthening of Russia's combat layout, the risk of geopolitical uncertainty has surged, and oil prices are short-term
or volatile.

At 8:13 Beijing time, U.
S.
crude oil is now trading at $84.
76 a barrel
.