US crude oil prices both plummeted, and US stocks are expected to experience deep adjustments

In the past week, the outbreak of global overseas epidemics has led tocrude oilPrice is tight, always hovering around2018year12month24Daily low point42.64Near the US dollar. At the beginning of the year, when the United States killed Iranian Major General Suleimani, it briefly broke through65.5Above, but still unable to break the high point, instead, it continued to decline. The reason for the decline of crude oil in the early stage was simply that the production reduction was not smooth and the crude oil demand was shrinking due to the COVID-19, but even so, it still hovered above the low point.

（WTICrude oil daily chart, as of3month6Day)

according toIEAAccording to the latest analysis report, the global crude oil market had already oversupplied before the outbreak of the coronavirus, leading to OPEC+Oil producing countries are reducing production. In the short term, to2025In the current year, the oil market still has sufficient supply. Last Friday, led by Saudi ArabiaOPEC+OPEC and its allies have begun a new round of negotiations with Russia on further production reduction agreements. The main producing countries were originally expected to agree to further daily production cuts150Million barrels to cope with the impact of the COVID-19. But the ultimate result was that Russia refused to continue reducing production.
Therefore, last Saturday, Saudi Arabia announced a comprehensive price war,4Monthly crude oil sales price reduction4-7The US dollars vary. Reduce prices comprehensively while increasing production comprehensively. Saudi Arabia's production this month is97010000 barrels/Japan, but Saudi Arabia announced that production will far exceed next month100010000 barrels/Day, may even reach120010000 barrels/Record high for the day. Saudi Arabia's move is aimed at deterring Russia, the United States, and other oil producing countries, and forcing them to return to the negotiating table to reach a production reduction agreement that is satisfactory to all parties.
This is not the first time Saudi Arabia has engaged in such behavior. Right here6Years ago,2014year11In April, Saudi Arabia was unwilling to see the rise of US shale oil, but chose to increase production in a large scale to try to kill US shale oil with low oil prices. At that time, the price war of crude oil lasted for a whole year, and crude oil plummeted along the way2015End of year and2016At the beginning of the year, it fell to25USD level. But shale oil companies survived by borrowing, and OPEC had to persuade Russia to implement production cuts afterwards. For a period of time thereafter, US shale oil companies continued to increase production until2018In, the United States surpassed Russia and Saudi Arabia to become the world's largest oil producing country.

（2018In, the United States surpassed Russia and Saudi Arabia to become the world's largest oil producing country

The oil price war at that time lasted for a year, so the market was concerned that a full-scale oil price war between Saudi Arabia and Russia would erupt. Against the backdrop of a global economic downturn and the continued spread of the coronavirus, such a serious event has led to a surge in global market tension and triggered a sharp decline pattern.VIXThe panic index broke through historical highs yesterday and briefly broke through65The position of the high point above is2008The highest level since the subprime mortgage crisis. The long-term historical average of this index is approximately19Point, and rarely break up40Yesterday's surge in the index represents market concerns about the future economy.

Therefore, during the Asian session, oil prices plummeted sharply. The market's risk aversion sentiment has increased, increasing the market's selling of risk seeking assets and the pursuit of safe haven assets.
US stock market since2009The year has begun11The long-term bull market of the year finally saw a significant decline on Monday yesterday, with a recorded decline yesterday-7.79%, for2008The largest daily decline since the financial crisis of, Meanwhile, safe haven assets such as US Treasury bonds, Japanese yen, Swiss franc, andgoldSafe haven currencies received strong demand yesterday. The Japanese yen appreciated significantly yesterday, and the exchange rate against the US dollar broke through at one point101。10The yield on one-year US Treasury bonds once fell to0.4690%，30The yield of one-year US Treasury bonds has fallen below1%。

However, during today's Asian trading session, yesterday's gains in safe haven products have started to recoup one after another. Therefore, although the US stock market experienced a severe decline yesterday, it cannot be judged as a bear market opening. On the contrary, the severely oversold market yesterday may experience a rebound and upward trend tonight. Both long and short sides need to pay attention to their positions. From a technical perspective, there is still a possibility of upward driving for the Dow Jones Industrial Average, and through wave structure division, it is expected that the US stock market will deeply adjust to23329.2-21712.5After the adjustment, the bullish market in the US stock market will continue. But it should be noted that if it falls below21712.5If this key support level is incorrect, the market segmentation needs to be re observed.

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