Crude oil trading reminder: OPEC+ insists on production cuts to support oil prices, and many European countries are considering imposing windfall profits taxes on energy companies

At the beginning of the Asian market on Wednesday, November 23, U.
S.
oil traded around $81.
25 per barrel; Oil prices rose on Tuesday after Saudi Arabia said OPEC+ was sticking to production cuts and could take further steps to balance the market
.
However, oil prices cut gains in late trading after reports that the European Union delayed plans to fully implement price caps on Russian oil exports and softened key shipping provisions and downplayed its latest sanctions proposal
.
The European Union has proposed adding a 45-day transition period
when introducing a price cap.

Factors affecting oil prices

[U.
S.
crude inventories fell by about 4.
8 million barrels last week]

Data from the American Petroleum Institute (API) said U.
S.
crude and gasoline inventories fell last week and distillate inventories increased
.
In the week ended Nov.
18, crude oil inventories fell by about 4.
8 million barrels, gasoline inventories by about 450,000 barrels, and distillate inventories by about 1.
1 million barrels
.

[Worries about dismal holiday shopping season fade, U.
S.
stocks rebound]

U.
S.
stocks rebounded on Tuesday, with the S&P 500 closing at its highest level in two-and-a-half months as Best Buy's sales forecast dispelled fears that
high inflation would lead to lackluster results during the holiday shopping season.

Retailer Best Buy became the top-performing S&P 500 constituent, jumping 12.
78 percent after forecasting a smaller drop in annual sales than previously announced and saying it believed greater deals and discounts would attract more customers
.
Best Buy's rally helped boost the S&P 500 retail index up 1.
21 percent
.

Conversely, discount retailer DollarTree tumbled 7.
79 percent, the worst-performing component of the S&P 500, which also limited gains in the retail sector as the company cut its annual profit forecast
for the second time.

Shawn Cruz, chief trading strategist at TDAmeritrade in Chicago, said, "If you look at the revenue and consumer continuum, the first half is relatively inelastic to some degree of cost increases, while the lower half is more sensitive
.
" So DollarTrees around the world really doesn't have much capacity to pass on those costs, so they're going to take quite a hit
.
”

The S&P 500 closed at its highest level since September 12; Support was also provided in the energy sector, which climbed 3.
18 percent after falling in the previous two sessions as Saudi Arabia said OPEC+ was sticking to production cuts, refuting Monday's report that the alliance was considering increasing production, which briefly sent crude prices sharply lower
.
OPEC+ is a coalition
of oil producers made up of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia.

Investors continue to try to assess the Fed's rate hike path, with Cleveland Fed President Mester reiterating on Tuesday that reducing inflation remains critical for the Fed, a day after she said support for a shift toward smaller rate hikes in December
.
Kansas City Fed President George said the Fed may need to raise interest rates to higher levels and stay there longer to curb consumer demand and cool inflation
.
Investors are still awaiting St.
Louis Fed President Bullard's speech on Tuesday, and the minutes of the Fed's November meeting are scheduled for
Thursday.

Trading was quiet on Tuesday, volume could be further reduced before the Thanksgiving holiday on Thursday, and U.
S
.
stocks will close at noon on Friday.
U.
S.
exchanges traded 9.
45 billion shares, with an average trading volume of 11.
75 billion shares
over the past 20 trading days.

Dow ingredient drug distributor Walgreens Boots Alliance rose 2.
96% after Cowen&;; Co upgraded the stock, citing a boost
from its healthcare services business.
Manchester United jumped late to close 14.
66 per cent higher after Sky News reported that the Glazer family, owners of the football club, were exploring financial options
that could include a full sale.
Agilent Technologies climbed 8.
08% after the application-focused solutions company reported upbeat fourth-quarter revenue
.
Pullbacks in the dollar and Treasury yields also helped support risk appetite
.

[Many countries consider imposing windfall profits tax on energy companies]

As the weather gets colder and Europe's energy cries continue, the German government is considering a countermeasure that is to impose a windfall profits tax
on energy companies.
With no oil and gas producers directly benefiting from high oil prices, the government has set its sights on the domestic power sector, with a draft document disclosed in October showing that the government plans to set a price cap on domestic and industrial electricity consumption, which would be funded mainly by windfall profits taxes levied on power companies, taking 90 percent of their profits
away.
Also in October, US President Joe Biden asked energy companies to use profits to expand production to lower energy prices, thereby reducing the pressure on the cost of living for American households, or call on Congress to push legislation to impose punitive taxes
on energy companies.
The Austrian government also announced on the 18th of this month that it plans to impose a windfall profits tax on oil and gas companies, with a tax rate of up to 40%.

[Iran announces that it has produced enriched uranium with an abundance of 60%]

The Iranian Atomic Energy Organization announced on the 22nd that Iran has begun to produce enriched uranium with an abundance of 60% at its underground nuclear facilities in Fordau in response to the anti-Iran resolution
proposed by the United States and three European countries at the meeting of the Board of Governors of the International Atomic Energy Agency earlier.

Iran has previously informed the IAEA that Tehran has decided to use "IR-6 advanced centrifuges to produce 60% enriched uranium"
at the Fordau underground nuclear facility, according to Iran's state news agency.
Reuters said that the Iranian nuclear deal reached in 2015 only allowed Iran to use first-generation IR-1 centrifuges, and as the agreement broke down, Tehran installed more efficient advanced centrifuges
.
In addition, enriched uranium at 60 per cent is well below the 90 per cent standard
required for weapons-grade materials.
At the time of the 2015 nuclear deal, Iran produced only 20% of enriched uranium, but the agreement requires it to limit it to 3.
67%.

[Ukraine may intercept gas supplied to Moldova]

Gazprom (Gazprom) issued an announcement on the 22nd that the amount of natural gas transiting through Ukraine to Moldova through the Suza metering station exceeded the actual transit of
natural gas recorded at the Ukraine-Moldova border.

The announcement said that on November 21, Moldovan Gas paid Gazprom part of the November payment according to the contract, and the actual amount of Russian gas delivered but not paid was 24.
945 million cubic meters
.

Gazprom stressed that if the imbalance in the transit of Moldovan gas through Ukraine continues, Gazprom will begin to reduce supplies to the Suza gas metering station at 10 o'clock on November 28 by the difference
between the amount of gas that should be supplied to Moldova per day and the gas actually received by Moldova.

Negative factors affecting oil prices

[U.
S.
says G7 should soon announce price cap levels for Russian oil]

A senior U.
S.
Treasury official said on Tuesday that the Group of Seven should soon announce a price cap on Russian oil exports, possibly adjusting that cap several times a year instead of
monthly.

The G7, which includes the United States and the European Union, is scheduled to impose a price cap on Russian seaborne oil exports on December 5 to punish Russia for hitting Ukraine
.
The move is aimed at reducing oil revenues from Russia's war machine while keeping its oil flowing to global markets to prevent price spikes
.
The price cap on Russian oil exports is scheduled to be implemented
on February 5.

[The global economy is expected to slow sharply next year, Europe will be particularly hurt]

The Organisation for Economic Co-operation and Development (OECD) said the global economy should be avoidable next year, but the worst energy crisis since the 1970s would trigger a sharp slowdown, with Europe hardest hit
.
The OECD said world economic growth would slow to 2.
2 percent next year from 3.
1 percent this year and then accelerate to 2.
7 percent in 2024, slightly revising its 2022 forecast
.

[The probability of a 50 basis point rate hike by the Fed in December is 75.
8%]

According to CME "Fed Watch": the probability of the Fed raising interest rates by 50 basis points to the range of 4.
25%-4.
50% in December is 75.
8%, and the probability of raising interest rates by 75 basis points is 24.
2%; the probability of a cumulative rate hike of 75 basis points by February next year is 32%, the probability of a cumulative rate hike of 100 basis points is 54%, and the probability of a cumulative rate hike of 125 basis points is 14%.

George George, chairman of the Federal Reserve Bank of Kansas City, said that given that households still hold the large amount of savings accumulated since the pandemic, the Fed may need to raise interest rates to higher levels and stay there longer in order to successfully ease consumer demand and reduce high inflation
.

Overall, OPEC+ insists on reducing production, API inventory data shows that inventory declines support oil prices, Iran announced that it has produced enriched uranium with an abundance of 60%, exacerbating US-Iran tensions, and many European countries are considering imposing windfall profits taxes on energy companies, if the EIA inventory data in the evening shows a further decline in inventories, oil prices will be boosted to the upside, but due to the impact of G7 or will soon announce restrictions on Russian oil, oil price increases are limited
.