A Week Fell 11%: Crude Oil Mad Bull Hit Hard

Affected entities, such as poor economic growth and consumption, and other factors, international oil prices recorded a weekly decline of 11% last week.

Dragged down by slowing consumption, international oil prices fell. New York's oil price plunged 11% last week, challenging a 150 dollar defeat in the biggest weekly decline. Analysts said that the real economy was in poor condition, the growth rate of crude oil consumption slowed down, and speculative funds fled to the market, leading to market collapse.

International oil price Drop sharply

Last week, international oil prices fell for 4 consecutive days. As of Friday's end, the New York Mercantile Exchange (NYMEX) crude oil futures contract fell 0.71 U.S. dollars in September, closing at 129.47 U.S. dollars / barrel; the London Intercontinental Exchange (ICE) Brent crude futures contract fell 1.24 dollars in September, closing at 130.06 U.S. dollars / barrel, both fell to the lowest level in 6 weeks. It is worth noting that in the past week, international oil prices have just hit a new high of 147 US dollars / barrel, but then hit another record in the biggest weekly decline. Last week, New York crude oil weekly decline was 11.11%, London crude oil week fell 10.93%, domestic Shanghai oil futures fell 2.55%, and closed at 5472 yuan / ton.

Over the same period, the international foreign exchange and bulk commodity markets have also been greatly affected. Last week, the CRB index, which reflected the trend of global commodity market, dropped 31.27 points to 562.86 points, or 5.26%. Among them, New York gold fell 0.27% to 958 U.S. dollars / ounce; London copper fell 2.6% to 8097.5 U. S. dollars / ton, aluminum fell 8.40% to 3044 U. S. dollars / ton; Chicago soybean fell 8.98% to 1451.4 cents / bushels, corn is down 11.03% to report 631 cents / bushels. And similar to the trend of international oil prices, these commodities have just hit or near record highs in July, but immediately dropped from the high point.

The US economy is in a stagnant cycle.

The economic slowdown and high prices have made the monetary authorities in various countries in a dilemma. Last week, Bernanke, chairman of the US Federal Reserve (FED), issued a semi annual report on monetary and economic policies, saying that the US economy is going through a "difficult period" as house prices fall, financial market turbulence, social unemployment rate and rising commodity prices.

"The property market is indeed the core element of the crisis, and any measures we can take to enhance the strength of the housing market and mortgage financing will be beneficial." Bernanke is urging lawmakers to approve the Treasury's bill to support the mortgage market. He pointed out that although housing construction will stabilise at the end of this year or early next year, due to the fact that there are still a large number of houses to be sold, housing prices may fall longer, which brings enormous pressure to the financial market.

The package of economic data released in the subsequent report shows that the US economy has slowed down in the first half of this year, the unemployment rate has increased to 5.5%, and the inflation rate has reached 3.5%. Data show that the US consumer price index (CPI) increased by 1.1% in June, the highest monthly rate since September 2005, and the US CPI in June increased by 5% over the same period last year, the highest annual rate since 1991. The US producer price index (PPI) increased 1.8% in June from last month, up 1.4% from May and the market forecast rose 1.3%. Meanwhile, the Yishoufang transaction in the real estate market has dropped, especially in areas where housing prices have risen too rapidly a few years ago.

Analysts say the US economy is in a stagnant mire and the Fed's monetary policy is hard to choose. Earlier, the oil price rose inflation index, the market has expected the Fed may end the cycle of interest rate cuts, and even raise interest rates to combat inflation. However, taking into account the current weakness of the US economy, the possibility of US interest rate hikes in the near future has also been greatly reduced.

European and Asian economies followed closely.

Economies in Europe and Asia are equally beset with difficulties. According to Reuters survey last week, Germany's Ifo business sentiment index in July will deteriorate again. Analysts expect the Ifo index to fall to 100 from 101.3 in June, due to increased costs and slowing exports. Germany's economic growth will drop from 1.5% in the first quarter to below 0.75%.

Subsequently, the data released by China's National Bureau of statistics showed that China's economy is facing double pressures of slowing down and inflation. In the first half of this year, China's gross domestic product (GDP) reached 130619 billion yuan, calculated at comparable prices, an increase of 10.4% over the same period last year, and its growth rate dropped by 1.8 percentage points over the same period last year. Among them, the GDP growth in the second quarter was 10.1%, lower than the 10.6% in the first quarter, and the growth rate has dropped for 4 consecutive quarters, and it is the lowest level of economic growth in two years. In terms of price level, although consumer prices (CPI) continued to fall, from 7.7% in May to 7.1% in June, the rise in the prices of manufactured goods (PPI) rose again, from 8.2% to 8.8%. Overall, CPI rose by 7.9% in the first half of this year, still at a high level.

Energy consumption or inhibition

In view of this, the economic prospects of various countries are dim. In July, Bloomberg's global confidence index fell to its lowest level since the index was compiled. Bloomberg said crude oil prices continued to soar in the international market, which had an impact on businesses and consumers. At the same time, inflationary pressures caused by rising oil prices will force central banks to raise interest rates, and the outlook for global economic growth is even more optimistic. In addition, the housing market recession in the US has further engulfed investors' confidence in financial institutions such as Fannie Mae and Freddie Mac, the US mortgage financing giant, and financial market turmoil has intensified.

With this drag, world energy demand will slow down. Last Friday, the US Energy Information Agency (EIA) released preliminary data showing that US crude oil imports fell 635 thousand barrels in May to 9 million 657 thousand barrels, or 6.2%, the lowest level of crude oil imports since May in 2002. On the same day, the American Petroleum Association (API) also indicated that the US demand for crude oil and petroleum products decreased by 1.4% in June compared with the same period last year. Oil prices rose to record highs and the economy was weak, leading to the biggest decline in US oil demand in 17 years in the first half of 2008.