On Monday (September 2), in the morning session of the Asian market, international oil prices continued to decline, with US crude oil hitting a new low of over a week at $72.96 per barrel. Oil prices fell more than 3% last Friday, giving up all the gains from last Thursday. Investors assessed expectations that OPEC+supply would increase from October, and hopes of a significant interest rate cut in September weakened after US data showed strong consumer spending.

In addition, the official manufacturing PMI for August released by major Asian countries last weekend hit a six-month low, which also dragged down oil prices.

The Brent crude oil futures for October delivery, which expired last Friday, closed down $1.14, a decrease of 1.43%, with a settlement price of $78.80 per barrel. The cumulative weekly decline was 0.3%, and the cumulative decline in August was 2.4%.

The settlement price of US crude oil futures fell by $2.36, or 3.11%, to $73.55 last Friday. It fell by 1.7% last week and 3.6% in August.

Six sources from OPEC+stated that the alliance will increase oil production as planned starting from October, as Libya suspends production and some member countries commit to reducing production to make up for over quota production, offsetting the impact of sluggish demand.

Phil Flynn, an analyst at Price Futures Group, said, "The OPEC+discussion about reducing production cuts as planned is the headline news that really caused us to decline today

The Libyan National Oil Company stated that as the conflict between hostile factions in the east and west continues, the recent closure of oil fields has resulted in a loss of approximately 63% of the country's total oil production.

According to consulting firm Rapidan Energy Group, production losses could reach 900000 to 1 million barrels per day and will continue for several weeks.

At the same time, investors responded to the new data. The steady growth of US consumer spending in July indicates that the economy is still on a relatively stable foundation at the beginning of the third quarter and does not support a 50 basis point rate cut by the Federal Reserve next month.

The US dollar rose to a one and a half week high last Friday, which also put pressure on oil prices.

In addition, due to factors such as high temperatures and heavy rainfall, as well as the off-season in some industries, both production and demand have slowed down, leading to a further decline in the official manufacturing PMI of major Asian countries to a six-month low in August, and a significant drop in the price index. Among them, high energy consuming industries such as petroleum processing and black metal smelting have experienced significant declines, which is the main reason for dragging down PMI.

The official Purchasing Managers' Index (PMI) for manufacturing in major Asian countries fell further to 49.1 in August, hitting a six-month low and falling below the median survey estimate of 49.5. This is the fourth consecutive month that the index has been below the boom bust line.

Among them, the production index decreased by 0.3 points month on month to 49.8, which is also a six-month low and the first time in six months that it has fallen into a shrinking area; The new order index dropped to an eight month low of 48.9; However, the new export order index rose slightly by 0.2 points to a four month high of 48.7.

The comprehensive PMI output index of major Asian countries in August fell to 50.1, the lowest level since December 2022.

The geopolitical situation remains tense, providing slight support for oil prices. Investors need to continue to pay attention to news related to the geopolitical situation.

Monday falls on a US Canada public holiday, and the US stock market is closed on Monday; The trading of US crude oil futures contracts under CME ended ahead of schedule at 02:30 Beijing time on the 3rd, while the trading of Brent crude oil futures contracts under ICE ended ahead of schedule at 01:30 Beijing time on the 3rd.

In terms of US data, the final values of ISM manufacturing PMI and S&P global PMI will be released on Tuesday, factory orders, JOLTS job vacancies, trade balance data, and the Federal Reserve's Beige Book will be released on Wednesday, and ADP's August employment report, one week unemployment data, and ISM services PMI will be released on Thursday.

The highlight is naturally the US non farm payroll report on Friday; The survey predicts that 165000 new job opportunities may be created in August, and the unemployment rate is expected to drop to 4.2%. After the data is released, the third in command of the Federal Reserve and President of the New York Fed, Williams, will give a speech.

OPEC+may increase production as planned from October onwards

Six sources from OPEC+stated that the organization will increase oil production as planned starting from October, as Libya suspends production and some member countries commit to reducing production to make up for excess quotas, offsetting the impact of sluggish demand.

OPEC+is an alliance of oil producing countries composed of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia.

The eight member countries of OPEC+plan to increase their production by 180000 barrels per day in October as part of starting to lift the recent reduction of 2.2 million barrels per day, while continuing to implement other production reduction measures until the end of 2025.

The slowdown in demand growth, especially in major Asian countries, has had an impact on oil price LCOc1 and has led some analysts to question whether OPEC+will continue with its October production increase plan.

But six OPEC+sources said that the production increase plan will still be implemented, as the shutdown in Libya has tightened market supply, and the possibility of the Federal Reserve/FED cutting interest rates in mid September is increasing.

OPEC、 The Saudi government's Office of Information and Communications and the office of Russian Deputy Prime Minister Novak did not immediately respond to requests for comment.

One of the sources said, "There are many uncertain factors on the demand side, but people also hope that the Fed's interest rate cuts will promote economic growth

OPEC has previously stated that if it believes the market is not strong enough, it can suspend or reverse its production plans.

Two sources said that future production plans will be decided on a monthly basis.

The planned increase in oil production in October is only equivalent to a reduction of 700000 barrels per day in Libya's oil production and a small portion of the compensatory production cuts promised by Iraq, Kazakhstan, and Russia.

The US dollar has risen widely, and inflation data supports the Federal Reserve's slight interest rate cut

The US dollar rose last Friday as data showed that a key inflation indicator in the US met forecasts, while personal spending and income increased, supporting expectations that the Federal Reserve may cut interest rates by 25 basis points next month instead of 50 basis points.

Some market participants had anticipated a significant interest rate cut in September, believing that the Federal Reserve had fallen behind in easing policy and should catch up.

According to calculations by the London Stock Exchange Group (LSEG), the probability of the US interest rate futures market expecting a 50 basis point rate cut next month last Friday was 31%, lower than Thursday's 35%. The market fully digested the expectation that the Federal Reserve would announce its first rate cut in over four years at its September meeting.

The market also believes that there will be a cumulative interest rate cut of about 100 basis points in 2024.

Last Friday's data showed that the US Personal Consumption Expenditures (PCE) price index rose 0.2% month on month in July, in line with expectations, with a confirmed increase of 0.1% in June. The PCE price index increased by 2.5% year-on-year in July, which is the same as the growth rate in June. After a 0.3% increase in June, consumer spending increased by 0.5% in July.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities, said, "It's clear that we're going to cut interest rates. I think it's debatable whether to cut interest rates by 25 basis points or 50 basis points, and it will depend entirely on this week's employment data. I expect to cut interest rates three times, with a possible 50 basis point cut in September depending on the employment data. If that doesn't happen, there could be a 25 basis point cut in September and then a 50 basis point cut in December

After the release of inflation data, the US dollar index rose to its highest level on the 10th, with a closing increase of 0.3% to 101.7. Last week, the US dollar index rose 1%, achieving its best weekly performance since early April. However, the US dollar index fell 2.6% in August, marking its worst monthly performance since November last year.

Ukraine launches massive drone attacks on Russian power and oil plants, Russian missiles strike Kharkiv

On Sunday (September 1st), Russia launched a missile attack on a shopping and activity center in the northeastern Ukrainian city of Kharkiv. Officials reported that at least 47 people were injured, including five children.

Earlier that day, Russia claimed that Ukraine had launched one of the largest drone attacks since the start of its full-scale war, targeting power plants and oil refineries; The Russian army has made further progress in an important town in eastern Ukraine.

The Kharkiv attack prompted Ukrainian President Zelensky to once again call on allies to allow Kiev to launch missiles provided by the West deeper into enemy territory, reducing Russia's military threat.

Russia is currently intensifying its offensive in eastern Ukraine while attempting to expel the Ukrainian army that broke through its western border during the August 6th raid.

Zelensky responded to the Kharkiv attack on his Telegram channel by saying, "All necessary forces in the world must be used to stop this terrorist act." Ukrainian officials said that at least 10 missiles were attacked this time.

In Kharkiv, rescue workers and volunteers lifted injured civilians onto ambulances outside shopping centers. Glass shards and debris scattered on the ground, and people fled to the subway station for refuge.

Russian officials earlier stated that air defense forces shot down 158 drones launched by Ukraine overnight, causing debris to catch fire at the Moscow refinery and the Konakovo Power Station in the nearby Tver area.

Kiev has not yet expressed its opinion on the drone attack incident. Russia rarely discloses all the losses caused by the Ukrainian airstrikes.

In the fiercely contested eastern part of Ukraine, the Russian military continues to advance towards the important military hub of Pokrovsk, which serves as a transportation hub to northern towns.

Ukraine had hoped that last month's raid on the Kursk region of Russia would force the Russian military to redeploy and ease the pressure on the besieged forces in the east, but so far it seems to have had no effect.

The Russian Ministry of Defense stated that the Russian military has occupied two more settlements in the Donetsk region and is "continuing to advance deep into enemy defenses." One of the settlements, Ptyche, is located 21 kilometers southeast of the city of Pokrovsk.

Ukrainian officials have stated that Russia's shelling of Kurakhove town, located approximately 35 kilometers south of Pokrovsk, has resulted in at least three deaths and nine injuries.