Oil declines Record-High Producer Prices in Japan


Oil declines Record-High Producer Prices in Japan

Oil prices fell on signs of a sharp decline in economic activity in China due to coronavirus quarantine actions

Evest follows market developments in the following report


Oil declines after a sharp decline in China’s economic activity

Aramco’s quarterly earnings grow 1.8 times in a year

Goldman Sachs analysts cut expectations for the US economy’s growth

Record High Producer Prices

projections of an increase in China’s Economy





Oil declines after a sharp decline in China’s economic activity

China’s industrial production fell in April for the first time since March 2020
and the decline in retail sales was the highest since the same time, according to new official statistics
China is the world’s largest oil importer, and poor statistics on the economy
indicate a possible decline in energy consumption in the country

Brent crude futures for June fell by $2.41 (2.16%) on the London Futures Exchange
to $109.14 per barrel. Brent crude rose by $4.1 (3.8 percent) to $111.55 per barrel on Friday

The June futures price for West Texas Intermediate crude at the time was lower in electronic trading
on the New York Mercantile Exchange (NYMEX) by $2.22 (2.01%), to $108.27 per barrel
During the previous session, the futures contract rose by $4.36 (4.1%) to $110.49 per barrel

As a result of last week, the price of Brent crude rose by 0.8%
that of West Texas Intermediate – by 0.7%

EU finance ministers will discuss the next round of sanctions against Russia in BrusselsIt
has already been reported that some European States are willing to consider the possibility of delaying
the introduction of an embargo on the import of Russian oil in the event that Hungary does not support it

According to Bloomberg, Germany plans to halt oil imports from Russia by the end of this year
even if the EU does not take a coordinated decision to impose a ban




Aramco’s quarterly earnings grow 1.8 times in a year

Saudi Aramco’s net profit grew 1.8 times year on year and reached $39.5 billion in the first quarter of 2022 due to higher oil prices
increased sales volumes and increased refining profitability

Saudi Aramco’s operating cash flow rose by 44% to $38.2 billion
while free cash flow rose by 68% to $30.6 billion

Saudi Aramco’s capital expenditure for the reporting period was $7.6 billion
down 7.5% from the first quarter of 2021
The company indicates that it expects to increase capital expenditures until about
mid-decade to implement a long-term development strategy

Saudi Aramco will allocate $ 18.8 billion for dividends from January to March
and it is decided to distribute one free stock per ten shares in the company.

Saudi Aramco’s average daily hydrocarbon production in the first quarter was 13 million barrels of oil equivalent
(11.5 million barrels in the first quarter of 2021)




Goldman Sachs analysts cut expectations for the US economy’s growth

Analysts at Goldman Sachs Group Inc. cut the US economy’s growth forecasts for 2022 and 2023
citing a decline in financial markets due to tightening Federal Reserve monetary policy

US GDP growth forecast for the current year has been lowered to 2.4% from 2.6%
and for the coming year to 1.6% from 2.2%, according to the Bank’s audit

Analysts said that “slowing economic growth would help reduce new jobs and lead to some
increase in unemployment” given the very high vacancies as they are now

Audit authors predict that US unemployment, which stood at 3.6% in April
will fall to 3.4% in the coming months and rise to 3.7% by the end of 2023

In mid-April, analysts at Goldman Sachs estimated that there was a 35%
probability of a recession in the United States in the next two years




Record High Producer Prices

In Japan, producer prices rose by a record 10% year-on-year in April amid the Russian-Ukrainian crisis
as well as higher energy and commodity prices under a weak yen
This is evidenced by the Bank of Japan’s data

In March, producer prices rose by 9.7%
Experts surveyed by FactSet forecast average growth of 9.4% in April

The prices of petroleum products and coal jumped by 30.9%
iron and steel crude – by 29.9%, for chemical products – by 10.2%

Consumer prices in Japan rose by 1.2% last month compared to March

Increasing producer prices is likely to affect consumer inflation
which is still below the Bank of Japan’s 2% target. This data will be published on May 20




projections of an increase in China’s Economy

China’s National Bureau of Statistics expects the country’s economy to improve in May
as manufacturing activity recovers in areas affected by the coronavirus infection
National Bureau of Statistics spokesman Fu Linghui told reporters

The authorities hoped that the recovery of consumer energy would accelerate, he said
adding that China’s economy would maintain a relatively steady upward trend in the second quarter of this year

In March and April, dozens of cities in China imposed full or partial lockdowns due to an increase in COVID-19 infections

The latest GSO data showed national retail sales fell by 11.1% year-on-year in April, the sharpest decline since March 2020

Catering establishments in some provinces were suspended, resulting in a 22.7% revenue decline in April
Auto sales in China fell by 47.6% compared to April last year

Marketing problems led to a 2.9% year-on-year decline in industrial production
due to lower demand, 11% decline in oil refining and 4.3% decline in electricity generation

The labor market has been affected by all these factors
with the unemployment rate rising to its highest level since February 2020, reaching 6.1% in April

Overall, according to data from the Central Statistical Agency
industrial production in China grew over the four months of this year by 4% year-on-year
but fell in April by 2.9% compared to April last year and by 7.08% compared to March 2022

From January to April 2022, oil production rose by 4.3%, natural gas by 6.2% and coal by 10.5%
In the meantime, China reduced oil imports by 4.8% and gas imports by 8.9% during this period