On May 13, international oil prices fell sharply. The settlement price of the main contract in the US WTI crude oil futures market was $63.82/barrel, down $2.26 or 3.4%. The settlement price of the main contract in Brent crude oil futures market was US $67.05/barrel, down US $2.27 or 3.3%. On Thursday, the oil price plummeted by more than 3%. This was mainly due to the severe epidemic situation in India, which rekindled market worries, and the resumption of operation of the U.S. fuel pipeline, which was unable to operate due to the previous cyber attack, adding to the macro aspect, and the increase of U.S. inflation expectations, The market's concern about the Fed's expectation of raising interest rates also pushed the pause button for the rise of oil prices.
At the macro level, with the release of the US inflation data, the global market's inflation concerns have intensified, and the resulting concerns about the Fed's interest rate increase have spread to the field of risk assets, and the decline of oil prices has also been affected to some extent. Specifically, CPI in the United States rose 4.2% year on year in April, setting a new high since September 2008, with the expectation of 3.6% and the previous value of 2.6%; Among them, core CPI rose 3% year on year, expected to be 2.3% and the previous value was 1.6%. After the data was released, the probability of the US money market believing that the Federal Reserve will raise interest rates by 25 basis points in December 2022 rose from 88% to 100%. On Thursday, the US will also release April PPI data, which is expected to rise 5.9% year on year.
Previously, the largest fuel pipeline system in the United States was closed after being attacked by hackers. Due to the importance of this fuel pipeline, nearly half of the fuel supply on the east coast of the United States was affected, resulting in a shortage of fuel and rising prices in the East Coast states. It resumed on Thursday after six days of closure, greatly easing the market's previous tight supply sentiment and lowering oil prices. It is reported that at the initial stage of the system restart, the pipeline fuel supply in some areas may be unstable, and it will still take several days to fully recover to the normal level.
With the resumption of fuel pipeline operation in the United States, the bad supply has further strengthened the concern of demand, and the aggravation of the epidemic in India has made the market return to the expected variables of demand recovery.
In the past 24 hours, there have been 362727 new confirmed cases and 4120 new deaths in India, with a total of more than 23.7 million confirmed cases and 258317 deaths, according to statistics released by the Ministry of health on the 13th. On the surface of the data, the epidemic situation is still aggravating. The mutated virus complicates the epidemic situation in India and even Southeast Asia. India is the third largest oil importer in the world, which is bound to further damage oil demand.
It seems to the SunSirs, the sharp decline in oil prices on Thursday was a release of accumulated risks in the early period. On the basic side, oil prices still have strong support. From the data of US commercial crude oil inventory last week, crude oil inventories continued to decrease, US exports also declined, China's data also showed a bright eye, and oil imports also showed a growth momentum, It shows that the recovery process of the world's major economies has accelerated. It is expected that the short-term oil price will intensify the shock, and the medium and long-term oil price will still have a positive momentum.
