Crude oil: G7 to Russian oil price limit entered the countdown! The US dollar retreated to support oil prices

At the beginning of the Asian market on Monday, November 7, U.
S.
oil traded near $90.
80 / barrel; Oil prices rose more than 5% on Friday, and supply is expected to remain tight
amid uncertainty about future Fed rate hikes, a planned embargo on Russian oil in Europe and a decline in U.
S.
crude inventories.

During the day, the focus will be on the Eurogroup meeting and the speeches
of Fed officials.

Negative factors affecting oil prices

[Surge in respiratory infections among children in many parts of the United States]

A number of US media reported that recently, there has been a surge in respiratory infections among children in many parts of the United States, and respiratory syncytial virus is spreading
in the United States at an "abnormally high level".

Respiratory syncytial virus is a common respiratory virus with mild symptoms, similar
to the common cold.
Most infected people recover within one to two weeks, but people such as infants and the elderly are at higher risk of severe disease, especially children under 5 years of age and older people over 65 years of age
.
The virus is the most common cause of bronchiolitis and pneumonia in children under 1 year of age in the United States, with about 58,000 children under 5 years of age hospitalized each year for respiratory syncytial virus
.

Earlier, US media reported that more than 70% of pediatric hospital beds in the United States have been filled
due to the surge in pediatric patients.

[California may face three epidemic threats this winter]

Recently, some US media reported that due to the rising infection rate of the new coronavirus, influenza virus and respiratory syncytial virus, this winter, California may encounter the threat of three epidemics at the same time, which is expected to have a huge impact
on the state's medical system.

The California Department of Public Health said in a report on November 3 local time that there are signs that the new crown epidemic has re-upward momentum
in the state.
At present, not only the number of confirmed cases of new coronary pneumonia in California continues to increase, but the number of people hospitalized for new coronary pneumonia is also rising
.
Local media pointed out that the current situation of the new crown epidemic in California is seriously underestimated, because the state now only conducts about 72,000 new coronavirus tests per day, which is far from enough for California, which has about 40 million residents, and in June this year, the state conducted at least 250,000 tests
a day.

In addition, the surge in the number of infections with the new Omicron subtype variant and the extension of people's indoor activity time after the colder weather will make the development of the new crown epidemic in California even more serious
.

There are many factors affecting oil prices

[The countdown to the entry into force of the G7 sanctions on Russian oil price restrictions has begun]

With just one month to go before the G7 set a cap on Russian crude prices and the EU embargo on Russian seaborne crude to come into effect, many implementation details are still being
finalized.

On November 4, local time, Reuters quoted people familiar with the matter as reporting that the G7 and Australia agreed to set a fixed price ceiling for Russian prices instead of adopting floating prices
.
But it still takes weeks to
decide on the limit level.

The alliance fears that if a floating price is set below Brent's international benchmark, Russia may raise the price of Brent crude by reducing supply, thereby eliminating the impact of the price limit or even benefiting
.

[Investors evaluate non-farm payrolls report, U.
S.
stocks close higher]

U.
S.
stocks closed higher in choppy trading on Friday, ending a four-day losing streak as investors assessed a mixed earnings report and Fed officials' comments
on the pace of interest rate hikes.

The S&P 500 and Nasdaq both rose as much as 2 percent earlier in the session, while the Dow Jones Industrial Average climbed 1.
9 percent, paring gains or even briefly falling
after a closely watched labor market report.
The report showed that the unemployment rate rose in October, suggesting that the job market may finally start to show some signs of loosening, giving the Fed room to
slow the pace of interest rate hikes from December.
But the data also showed that average hourly earnings rose slightly more than expected, as did job growth, suggesting that the labor market remains largely entrenched
.

Labor market data has been a major focus for markets, with the Fed repeatedly saying it wants to see signs of
cooling before considering a pause in rate hikes.
Fed Chairman Jerome Powell's hawkish speech on Wednesday heightened concerns that the Fed's rate hikes could last longer than previously expected, putting further pressure on
stocks.

Shawn Cruz, chief trading strategist at TDAmeritrade, said: "This is not a report
that indicates that the effects of rate hikes are starting to appear.
You could probably say that this movement is partly due to the fact that after Powell spoke at the meeting, the selling was a bit overdone, so maybe the sellers had sold out and
left.
”

On Friday, several Fed officials echoed Powell's claim that the pace of rate hikes could slow down in the future, but would need to continue for a longer period of time, and that rates could exceed the 4.
6%
forecast at the September meeting.
Later in the session, Chicago Fed President Evans said the Fed could "consider" pausing rate hikes, even if stocks get a subsequent boost
a year from now.

Last week, the Dow fell 1.
39%, ending a four-week winning streak, with the S&P 500 down 3.
34% and the NASDAQ down 5.
65%, the biggest weekly drop since January
.
A series of mixed data released earlier last week suggested some parts of the economy were slowing but also underscored the resilience of the U.
S.
labor market, despite aggressive interest rate
hikes by the Federal Reserve to curb inflation.

According to CME's FedWatch tool, traders' expectations for a 75 basis point rate hike in December jumped briefly after the jobs report, but are now pricing in a 50 basis point chance of a 50 basis point hike of around 62%.

Market focus shifts to key consumer inflation data due this week, as well as the US midterm elections on November 8, when the two parties compete for control of Congress
.

[Despite strong jobs data, Fed officials consider slowing the pace of rate hikes at their next meeting]

U.
S.
job growth exceeded expectations in October, but the pace is slowing, with the unemployment rate rising to 3.
7%, indicating some easing of labor market conditions, which will push the Fed to slow the pace of
interest rate hikes from December.
U.
S.
nonfarm payrolls rose 261,000 in October, the smallest increase since December 2020, but higher than market estimates of an increase of 200,000.

Average hourly earnings rose 0.
4% in October, the year-on-year increase slowed to 4.
7% from 5.
0% in September, the smallest
since August 2021.
The unemployment rate rose to 3.
7% from 3.
5%
in September.

Boston Fed President Collins said: With interest rates now in restrictive territory, it is time to shift the focus from the pace or pace of rate hikes to determining what is a sufficiently restrictive level
.

Chicago Fed President Evans said it was time for the Fed to shift to smaller rate hikes to avoid tightening monetary policy more than necessary, and to slow down the pace
further once the risks became more "two-sided.
"

[The United States privately asked Ukraine to show Russia that it is willing to accept negotiations]

The Washington Post reported that the Biden administration is privately encouraging Ukrainian leaders to signal a willingness to negotiate with Russia and abandon its public refusal
to engage in peace talks while President Putin is in power.
The newspaper quoted people familiar with the matter as saying that the request of US officials is not aimed at pushing Ukraine to the negotiating table, but to ensure that Ukraine continues to receive support
from other countries that fear further escalation of the war.

Overall, employment data reignited hopes that the Fed might slow the pace of interest rate hikes, oil prices were supported, Europe imposed an embargo on Russian oil, or increased the possibility that Russia would raise oil prices by reducing supply, tight supply, coupled with the onset of winter, demand concerns may help oil prices rise back to the
100 mark.

At 8:12 Beijing time, U.
S.
crude oil is now trading at $90.
80 a barrel
.