According to the Mercantile Exchange of Vietnam (MXV), the commodity market has just ended a very volatile trading week. Many key commodities recorded the most swinging closing levels in months. This pulled the MXV-Index down by 2.68%, to 2,385 points.
Investment cash flow to the market also weakened, showing the cautious sentiment of domestic investors. The average transaction value of the whole Department is over 3,100 billion VND per session.
Crude oil records biggest weekly loss since late March this year
At the end of the trading week from December 5 to December 11, the selling force completely overwhelmed the energy market. In which, with all sessions of the week ending in the red, crude oil recorded the strongest weekly loss since the end of March this year. WTI oil price fell 11.20% to 71.02 USD/barrel, Brent fell 11.05% to 76.10 USD/barrel. Concerns about the picture of weakening consumption have dragged crude oil back to the lowest price range since the end of last year.
Macro risks come from the first sessions of the week, when US economic data showed that the service sector expanded in November, making many investors worried that the US Federal Reserve (Fed) will bring the peak level of the US economy to the next level. interest rates go up and stay for a long time to cool down the economy. The US dollar’s rally this week has also weighed on oil prices as holding costs become more expensive.
Macro pressures weigh on the outlook for world oil consumption, which is further demonstrated in the December Short-Term Energy Outlook (STEO) by the US Energy Information Administration (EIA). The agency has revised down its oil demand forecast from its November report for the fourth quarter and for all four quarters of next year, bringing average consumption in 2023 to around 100.82 million bpd. Meanwhile, global oil supply will improve in the second half of next year, bringing the average production level to around 101.06 million bpd. That continued to drag oil prices down in midweek sessions.
Average oil supply in the United States next year is forecast to surpass the 2019 record, alleviating some concerns about the potential for increased output from shale fields. According to data from Baker Hughes, the number of US oil rigs fell by 2 to 780 active rigs in the week ending December 9 after several weeks of increases. The number of oil rigs has also increased by about 30% year-to-date, as shale producers have expanded operations at a cautious pace.
Another factor that has had a notable impact on oil prices over the past week has been the spill at the Keystone shipping pipeline, which links oil fields in Canada to US refineries. TC Energy said yesterday that the company is continuing its recovery efforts at the pipeline, but the timeline for restarting the pipeline is still undetermined, which is likely to give oil prices a slight boost in the session. beginning of the week. However, the recovery is likely not to be too strong as investors cautiously await a series of important monthly reports from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA). ) in this week.
Soybean oil drops to 3-month low
In the agricultural market, at the end of the last trading week, soybean prices increased by more than 3%, recording the third consecutive week of closing in the green. In the context that the information in the Supply – Demand report (WASDE) of the US Department of Agriculture (USDA) has not had much impact, the prospect of improved demand is the reason for the price increase.
In this report, US soybean stocks in the 2022/23 crop year were maintained at 220 million bushels, different from the market’s expectation of an increase to 18 million bushels. Not only inventories, all other figures such as exports, output and consumption also remained unchanged. For the South American crop, Argentina and Brazil’s 2022/23 production figures are also unchanged, showing that USDA is still cautious in editing the figures and will not have a big impact on the crop. price movements. This has kept the price from moving too much after the report was released.
Meanwhile, according to China Customs data, the country’s soybean imports in November reached 7.35 million tons, greatly improved from 4.14 million tons in October. Loosening measures to prevent the Covid-19 epidemic is expected to boost consumption and purchase demand in the near future. In two Daily Export Sales reports last week, the US sold more than 1.2 million tonnes of soybeans in the 2022/23 crop year to China and some unnamed countries. This is the factor that has supported the price.
Meanwhile, soybean oil has continued to drop nearly 8%, hitting a three-month low last week. In its December WASDE report, based on an assessment of a recent proposal by the US Environmental Protection Agency (EPA) for a renewable fuel obligation, the USDA reported the volume of soybean oil used as biofuel is forecast to drop to just 11.6 billion pounds. In addition, record low sales until November also cut export figures. This is the factor that causes the price of soybean oil to weaken.
Reducing pressure on world commodity prices
This week will be the week that investors need to pay special attention and be careful with 2 important events of the month. Tomorrow evening, the Organization of the Petroleum Exporting Countries will release its Monthly Market Report. Then, at dawn on Thursday, the US Federal Reserve will also announce the minutes of its December meeting. The commodity market, especially the energy group, is likely to fluctuate very strongly around the time of the release of the bonds. data above.
According to MXV, Although the economic outlook is not bright and inflation is constantly putting pressure on consumption demand, however, crude oil price movements in the coming time will still bring many unknowns. Especially in the context, Russia continues to insist that it does not sell oil to participating countries in price caps, and has announced the possibility of cutting production if necessary. This will be a factor to help curb the price drop. Besides, the price zone of 70 USD/barrel will be an important support area. The US is also considering a plan to add to the strategic reserve, which is at a low level when oil prices are in this region.
Meanwhile, if inflation in the US continues to cool down significantly and Fed officials support a slow increase in interest rates, with a peak not higher than 5%, oil prices will have an impetus to recover.
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