As of the close, the three major U.S. stock indexes collectively closed down for two consecutive days, with the Dow Jones Industrial Average closing down 1.34%, hitting a new low since October 4. The S&P 500 closed down 1.18%, its biggest two-day drop since October last year. The Nasdaq closed down 1.83%. Moderna may face patent infringement lawsuits, and the first Omicron infection case in the United States received Moderna’s two-shot vaccine. Moderna once fell nearly 12%. The fear index VIX climbed, with the increase expanding to 8%.
In terms of commodity futures, international oil prices finally reversed and ended lower, with WTI January crude oil futures falling 0.92%; Brent February crude oil futures closing down 0.52%. New York gold futures ended two consecutive days of losses, with COMEX February gold futures closing up 0.4%. New York silver futures closed down 2.1%, falling for four consecutive days. Lun copper, Lun aluminum, Lun nickel and Lun tin all rebounded after falling on Tuesday.
Crude oil is suppressed by three major negative factors
In recent trading days, the sharp decline in domestic and foreign crude oil futures prices has attracted market attention.
Wang Weimang, a researcher at Zhonghui Futures, believes that crude oil is currently hit by three major negative factors. The impact of mutant virus strains has brought uncertainty to crude oil consumption demand. Powell has shown a clear attitude of accelerating monetary tightening, as well as the previous joint selling by many countries. The crude oil market is under pressure due to the reserve behavior.
According to Zhang Zhengze, a researcher at Guohai Liangshi Futures, this round of decline in oil prices has already started in early November, and the world has entered a new round of epidemic cycles at the end of October, which has shaken the main logic of bull demand recovery, but since last Friday At the beginning, crude oil experienced an accelerated decline, which surprised the market. This was mainly due to the sudden incident of Omicron, which brought greater uncertainty to the drag on the demand side of crude oil caused by the epidemic, causing extreme panic in the market. Coupled with the lack of liquidity brought about by the U.S. Thanksgiving Day, the lack of buying orders made the support for external crude oil weak during the decline, and further price declines triggered more stop-loss orders, amplifying the impact of price fluctuations. On Monday, with the recovery of liquidity and the digestion of panic, oil prices rebounded briefly. However, due to the lack of key information about Omicron, some countries temporarily strengthened blockades and restrictive measures, and the superposition is still in the midst of a new round of epidemic. During the cycle, the demand side is still relatively weak, and crude oil continues to run weakly.
At this current point in time, whether OPEC+ can maintain its previous plan to increase production remains unchanged, which is full of variables. At present, Russia and Saudi Arabia hinted on Monday that OPEC+ does not need to rush to adjust its oil production policy this week. Citigroup expects OPEC+ to maintain its plan to increase production by 400,000 barrels per day in January. However, another view is that Russian crude oil producers are currently operating at close to full capacity, and the sharp short-term decline in crude oil provides an excellent opportunity to suspend production cuts. However, Wang Weimang believes that the probability of OPEC+ adjusting production is low.
As of press time, OPEC+ has still not released information on production changes. Sources said OPEC has not yet made a decision on its production increase policy, pending Thursday’s OPEC+ meeting.
Currently, public content of the meeting shows that OPEC+ expects the oil surplus to increase to 2 million barrels per day in January 2022, 3.4 million barrels per day in February, and 3.8 million barrels per day in March. Wang Weimang said that if the market announces a halt to the production increase agreement or maintains the previous production increase scale unchanged, the market performance will be short-term. In the long term, it also depends on changes in the demand side and the situation of joint reserve sales by many countries. “The current demand side of the crude oil market mainly depends on the epidemic. If the epidemic worsens and supply increases, crude oil will continue to be under pressure; if the epidemic is not as severe as expected, the market will continue to trade, demand will recover, and oil prices will rebound.”
Zhang Zhengze believes that the crude oil trading logic in the market outlook will change to the verification and falsification of the seriousness of Omicron and the OPEC+ meeting’s statement of willingness to underpin demand. If OPEC+ does not make any operations and maintains the previous pace of increasing production, this will be a relatively pessimistic result. If the seriousness of the Omicron crisis cannot be confirmed or falsified, the market will most likely continue to fall. If OPEC+ suspends production increases beyond expectations, this is a relatively optimistic result. Oil prices may see a strong upward surge at the current position. However, it is difficult to achieve this situation quickly within OPEC+. This may require Omikron to Only after the seriousness is confirmed, countries will have the motivation to further support demand.
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