On Thursday (August 29) in the early Asian trading session, spot gold experienced a slight upward fluctuation, while U.S. crude oil prices were hovering around $74.60 per barrel. Previously, oil prices dropped by 1% at the close on Wednesday due to a smaller-than-expected decrease in U.S. crude oil inventories, combined with ongoing concerns about slowing demand from major Asian economies. However, supply uncertainties in the Middle East and Libya have limited further declines in oil prices.
Brent crude oil futures for October fell by 90 cents, or 1.13%, to settle at $78.65 per barrel. U.S. crude oil futures for October fell by $1.01, or 1.34%, to $74.52 per barrel. On Tuesday, Brent crude and U.S. crude futures both fell by over 2% after having risen sharply by 7% over the previous three days, with Brent crude briefly reaching $81 per barrel and U.S. crude hitting a high of $77 per barrel.
According to the latest data from the U.S. Energy Information Administration (EIA), U.S. crude oil inventories fell by 846,000 barrels to 425.2 million barrels last week, far below the 2.3 million barrel reduction expected by analysts. Refining activity has increased this week. Matt Smith, chief oil analyst at Kpler, pointed out: "If refinery utilization is indeed as strong as it is, hitting a six-week high, then the small decline in crude oil inventories is certainly surprising."
Concerns over demand from major Asian economies also continue to put pressure on oil prices, with recent data indicating economic struggles in key Asian economies and weakened demand for oil from refineries.
Additionally, shares of Nvidia and other tech giants fell late Wednesday, as investor disappointment grew despite expectations that Nvidia's strong performance forecast would boost the stock prices of some high-market-cap companies. On Wednesday, Nvidia's stock plummeted by 8% following its earnings report, wiping out more than $240 billion in market value. Several other AI-related companies also saw a combined market value decline of about $100 billion. Nvidia expects its third-quarter gross margin to be below market expectations, while revenue aligned closely with forecasts.
Nvidia expects third-quarter revenue to be $32.5 billion, plus or minus 2%; analysts had an average estimate of $31.8 billion, according to LSEG data. Nvidia forecasts an adjusted gross margin of 75%, plus or minus 50 basis points, for the third quarter; analysts' average gross margin forecast was 75.5%, according to LSEG data. Before the earnings report, Nvidia's stock fell by 2.1% in intraday trading on Wednesday. As of now, Nvidia's stock has risen by about 150% in 2024, leading the Wall Street frenzy for AI.
The weakening of Nvidia's stock added downward pressure on the U.S. stock market, further dragging down market sentiment and the performance of commodities. On Wednesday, the S&P 500 Index fell by 0.60% to close at 5592.18 points; the Nasdaq Index fell by 1.12% to 17556.03 points; and the Dow Jones Industrial Average fell by 0.39% to 41091.42 points. As of 08:50, the S&P 500 futures index had fallen by 0.5%.
The U.S. dollar index rose by 0.5% on Wednesday to 101.06, marking its largest single-day percentage gain since mid-June, which also put some pressure on oil prices.
Today, revised data on the U.S. second-quarter GDP and the change in initial jobless claims will be released, which investors should closely monitor. Geopolitical developments are also worth noting.
U.S. CIA Deputy Director David Cohen stated on Wednesday that Russian President Putin would launch a counteroffensive to reclaim territories in the Kursk region captured by Ukrainian forces, but it is expected to be a tough battle. Speaking at a national security industry conference, Cohen noted that Ukraine has taken control of about 300 square miles (777 square kilometers) of land in Kursk, the significance of which remains to be seen.
Cohen stated that although Kyiv has no intention of annexing the captured territories, the Ukrainian military is building defenses and seems to intend to "retain some of the land for some time." He stated: "We can be certain that Putin will launch a counteroffensive to try to recapture that territory. We expect it to be a tough fight for the Russians."
Iran's chief of the armed forces said on Wednesday that Iran would respond in a planned manner to the assassination of Haniya.
The potential loss of oil production in Libya and the possibility of the conflict between Israel and Gaza expanding to include Hezbollah fighters supported by Iran remain the biggest risks faced by the oil market, limiting the decline in oil prices on Wednesday.
Multiple oil fields across Libya have been shut down as a dispute over control of the central bank and oil revenues between rival government factions continues. This dispute has put about 1.2 million barrels per day of oil production at risk.
According to the latest EIA weekly report data, U.S. crude oil and gasoline inventories fell last week, while distillate inventories unexpectedly increased. As of the week ending August 23, U.S. crude oil inventories fell by 846,000 barrels to 425.2 million barrels, with analyst expectations for a 2.3 million barrel decrease. The EIA stated that crude oil inventories at the Cushing, Oklahoma delivery hub fell by 668,000 barrels.
Moreover, refinery throughput increased by 175,000 barrels per day last week, raising refinery capacity utilization by 1 percentage point to 93.3%. The EIA stated gasoline inventories fell by 2.2 million barrels to 218.4 million barrels, compared to an expected decrease of 1.6 million barrels. Distillate inventories, which include diesel and heating oil, rose by 300,000 barrels to 123.1 million barrels, with expectations for a decrease of 1.1 million barrels. The EIA also noted that U.S. net crude oil imports rose by 282,000 barrels per day last week.
Oil production in Libya further deteriorated on Wednesday, with the Sarir oil field almost completely shut down. Due to the escalating political dispute over the control of the central bank and oil revenues, the eastern authorities in Libya have announced the cessation of all oil production and exports. The Sarir oil field has a production capacity of about 209,000 barrels per day. Previously, the Sharara oil field, with a production capacity of 300,000 barrels per day, declared force majeure, and disruptions have also been reported at the El Feel, Amal, Nafoora, and Abu Attifel oil fields.
As of 08:58 Beijing time, U.S. crude oil was trading at $74.57 per barrel.
