International oil prices continued to rise on Tuesday, soaring 9% during the session. Brent crude oil reached a high of $58.85 per barrel, while NYMEX crude oil hit a one-month high of $54.09 per barrel. The dollar fell about 1% on the same day, the largest single-day decline since October 2013, which also boosted U.S. dollar-denominated commodities.
Brent crude oil trend
NYMEX crude oil trend
As of the close, Brent crude oil closed up $3.16, or 5.77%, at $57.91/barrel; NYMEX crude oil closed up $3.48, or 7.02%, at $53.05/barrel.
In the past four trading days, Brent crude oil futures and U.S. crude oil futures rose about $9, or about 19%, the biggest increase since January 2009.
US oil workers strike has continued until the third day.
Investors are bullish on oil prices
Although signs show that US crude oil inventories have increased again last week, investors are more confident that oil prices have bottomed out after seven months of falling oil prices.
On Tuesday, BP said it would cut capital expenditures, industry investments were lower, and the market expected crude oil production to be reduced, which would consume excess capacity.
BP CEO Bob Dudley reconciled expectations of lower production, saying on Tuesday that crude oil production is expected to continue to increase until the summer of 2015. BP announced that it would cut capital expenditure by 13.0% to $20 billion in 2015. Last week, Chevron announced it would cut capital expenditure by 13.0% to $35 billion.
Before
, several other energy companies also announced similar spending cuts, which inspired bulls in the oil market.
Oil companies compress spending
Last Friday, oil service company Baker Hughes said that the clarion call for a rebound in oil prices was sounded after the U.S. oil rig platform recorded its biggest weekly decline in nearly 30 years. Michael Hewson, chief analyst at
CMC Markets, pointed out that the announcement of large oil companies to cut capital expenditures will help support oil prices. "We have seen a lot of oil companies compress spending significantly and drilling platforms are also decreasing," Hewson said in the report. "The seeds of oil price recovery are being planted." He warned that the Gulf of Mexico, the North Sea and Brazilian crude oil production is at risk of decline, and oil companies have cut costs and responded to the decline of crude oil by more than 60.0% since June 2014.
analysts said, "Supply cannot reach the expected level and demand will recover from last year's lows."
Some analysts warned not to be too optimistic
Morgan Stanley analysts said the correlation between drilling volume and crude oil production is deceptive. They said, "It is impressive that the number of drilling has dropped significantly, but if we look at the data, most drilling wells have very low output, or directional drilling."
Many institutions, including Goldman Sachs, analyzed that the market supply and demand and economic aspects have not yet improved significantly. Crude oil still has about 10% downside.
Two OPEC representatives said they did not rule out oil prices falling to $30-35, as global refineries entered a maintenance period in the first half of 2015 due to weak demand.
The market is concerned about weekly inventory data released by the American Petroleum Association (API) later today. Analysts surveyed by Reuters expect U.S. crude and gasoline inventories to increase by 3.5 million barrels last week, and distillate inventories decreased.
Domestic refined oil may usher in the first increase in
According to domestic commodity information provider Treasure Island, as of the sixth working day on February 3, the average price of reference crude oil varieties was 48.035, with a change rate of 3.93%, and the corresponding increase in gasoline and diesel was 140-160 yuan/ton. Zhuochuang monitoring data shows that as of the closing on February 2, the crude oil change rate was 2.93% on the sixth working day, corresponding to gasoline and diesel increased by 120 yuan/ton.
According to the mechanism of domestic refined oil price adjustment every 10 days, if international oil prices continue to maintain an upward trend, the corresponding increase in refined oil prices is greater than 50 yuan/ton. After experiencing a seven-month decline, when the third price adjustment window opens in 2015, domestic refined oil prices may usher in the first rebound after "13 consecutive declines".
