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Market Update 03/04 – OPEC surprises, EV Q1 Demand Rose
OPEC+ makes shock with slashes of millions of barrels a day in an unprecedented and increasing inflation risk. Tesla Q1 demand rise prior price cut.
OPEC+ announced a surprise oil production cut of more than 1 million barrels a day from May. Despite previous assurances that supply would remain stable, and posing a new global economic risk. Due to an economic slowdown across developed economies, crude prices have fallen in recent weeks.
It’s a significant reduction in a market where supply was looking tight despite the recent price fluctuations for the latter part of the year.
There was an increase in oil prices after OPEC+ unexpectedly announced crude output cuts that could tighten the market, delivering a fresh inflationary shock to the world economy and causing frustration with the White House at the same time.
Bloomberg reports Oil futures soared as much as 8% in New York on Monday, the most significant intraday move in more than a year, and traded at $79.95 a barrel at 10:03 a.m. in London.
The price of gasoline also gained, which added to inflationary pressures that may force central banks around the world to keep interest rates higher for a longer period of time.
By 06:00 ET (10:00 GMT), they were back below $80 at $79.60 a barrel, up 5.2% from Friday. Brent was up 5.1% at $83.94 a barrel.
A number of U.S. stock markets are set to open mixed on the back of the surprise move by OPEC, which has cast further doubt on the ability of the Federal Reserve to begin loosening its monetary policy in response to the economic slowdown that has taken place in recent months.
As of 05:30 ET, Dow Jones futures had gained 102 points, or 0.3%, but the S&P 500 futures had fallen 0.2%, and the interest rate-sensitive Nasdaq 100 futures had fallen 0.7%.
TESLA EV Q1 Demand Rose
Tesla driven by aggressive price cuts in January, set a new record for car deliveries during Q1 2023. A bleak economic outlook and rising competition caused Tesla Inc to miss Q1 delivery estimates on Sunday, despite rising demand.
Based on Refinitiv data, Tesla delivered 422,875 vehicles in comparison to analyst expectations of 430,008 vehicles for the quarter.
Tesla’s CEO, Elon Musk, gambled by cutting prices to compensate for the loss in profits caused by eroding margins in order to increase sales. Despite the turbulent economic environment, Tesla’s attempt to boost demand with price cuts at a time when orders are under pressure from a stagnant economy. In addition, there is rising competition from startups such as Lucid Group as well as legacy players including Ford Motor Company has shown positive signs.
In terms of the stock price, Tesla shares have soared more than 68% this year on hopes it would win a price war it started even though the stock remains more than 50% down from its peak in November 2021.
“They grew deliveries 36% from a year ago, but Musk’s comment on the last earnings call was for 50% delivery growth. They will have to pick up the pace for deliveries for the rest of the year.” – Gene Munster, a managing partner of Deepwater Asset Management.
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