Future Views
After the release of bad gasoline consumption data in the United States, US oil prices plummeted, WTI set a new low since February 25, my country's SC crude oil night market also closed the largest physical negative line in the past month, the choice of oil price breaks seems to be overflowing, OPEC's wishful thinking failed, the bulls fell through this night after a short period of joy, if you are in it, objectively perceive the market. It is certainly possible to see the oil price crisis from the recent performance of the market. The recent weakening of cracking gap, the monthly gap decline, the more sensitive oil price to negative reactions, etc.... The OPEC+ meeting, which is highly anticipated, finally reached an agreement to increase production by 100,000 barrels per day from September. Because oil prices are in a very critical position, the OPEC production resolution this time has a significant impact on oil prices and has received high attention. In the past period of time, the crude oil market's demand performance was weaker than expected, and the market expects OPEC+ to be relatively cautious in increasing production. Judging from the initial market news, OPEC+ will discuss setting the output increase below 400,000 barrels per day when discussing the potential output growth in September. Later, there was news that the oil output increase was set to less than 300,000 barrels per day, and a resolution to increase output by 100,000 barrels per day was finally reached. Through the discussion process and OPEC+, it is obvious that it is to place chips in front of Biden and oil prices to protect their own interests more. Judging from the results of the meeting, keeping crude oil relatively acceptable prices is a more important consideration for oil exporting countries. This increase in output has no negative impact on oil prices than the previous monthly increase of 400,000 barrels per day. The market can easily digest it and is far lower than the market expectations. The market has made a normal positive reaction to this. After the news was revealed, oil prices rebounded significantly in the short term.
, but the market performance is more related to the direction of oil prices. As time enters the night trading period, the overall of the commodity market opened high and closed low and showed that the market confidence was very fragile, and oil prices also began to fall from high levels and gave up the increase leading the market. After the OPEC meeting, there was news that Iran's nuclear talks will restart. In the evening, the EIA report showed that crude oil inventories increased significantly, and gasoline demand was once again significantly weaker than expected, which once again hit market confidence. OPEC's final 100,000 barrels per day production increase resolution is to some extent an attempt to resolve the risk of oil prices breaking downward, but in terms of the overall influencing factors of oil prices, it is still facing pressure from the downward trend of macroeconomic and lower demand than expected. In the medium and long term, the market will still be unoptimistic, and the downward trend of oil prices will still be the trend of the second half of the year.
Daily Dynamics
[1] WTI's main crude oil futures closed down $3.76, down 3.98%, at $90.66 per barrel; Brent main crude oil futures closed down $3.76, down 3.74%, at $96.78 per barrel; INE crude oil futures closed down 2.83%, at $661.7 yuan.
【2】 USD index rose 0.07% to 106.4; the Hong Kong Stock Exchange dollar fell 0.13% to 6.7566; the US 10-year Treasury bond rose 0.22% to 120.39; the Dow Jones Industrial Index rose 1.29% to 32812.5.
Recent News
[1] Data released by the US EIA showed that as of July 29, the increase in commercial crude oil inventories except for strategic reserves exceeded expectations, the decline in refined oil inventories exceeded expectations, and gasoline inventories increased slightly.
Specific data shows that changes in EIA crude oil inventories in the United States actually increased by 4.467 million barrels in the week ending July 29, an expected decrease of 629,000 barrels, and the previous value decreased by 4.523 million barrels. Gasoline inventories actually reported an increase of 163,000 barrels, an expected decrease of 1.614 million barrels. Refined oil inventories actually reported a decrease of 2.4 million barrels, an expected increase of 1.038 million barrels, and the previous value decreased by 784,000 barrels. The
EIA report shows that US domestic crude oil production remained at 12.1 million barrels per day last week. U.S. crude oil exports fell by 1.036 million barrels per day to 3.512 million barrels per day last week. The average four-week supply of U.S. crude oil products was 19.917 million barrels per day, a decrease of 3.05% from the same period last year. U.S. strategic oil reserves (SPR) inventories fell by 4.69 million barrels last week to 469.9 million barrels, a drop of 0.99%. The
EIA report shows that the United States' imports of commercial crude oil except for strategic reserves in the week ending July 29 were the highest since the week of July 3, 2020.The decline in EIA refined oil inventory in the United States recorded the largest decline in the week from April 15, 2022. The U.S. strategic oil reserve inventory was the lowest since the week of May 17, 1985.
has an analysis that compared with last week, gasoline demand fell by 7.61%, reversing almost all gains in the previous week, resulting in a four-week rolling average drop by 2.5%. This decline shows that demand has been curbed despite the continued decline in retail prices of gasoline.
Asia and Middle East at least 9 new refining projects will be put into production before the end of 2023. According to the current planned production capacity, once the project is completed, the global refining capacity will increase by 2.9 million barrels per day; the
expansion plan is carried out after the global refining capacity has declined for a period of time. According to the International Energy Agency (IEA), global net production capacity fell for the first time in 30 years in 2021. The new refinery project will increase production of refined products such as gasoline and diesel, which may change the current high prices of these products.
In addition, Iranian and U.S. officials said they would go to Vienna to resume indirect negotiations on Iran's nuclear program, which rekinds hopes of lifting sanctions that hinder Iran's oil exports. This news also weighed on oil prices
[2] The final value of the US Markit service industry PMI in July was 47.3, falling below the boom and bust line , the lowest since July 2020. The U.S. economy deteriorated significantly in July, with business activity in both manufacturing and services declining. Excluding the months when the lockdown was imposed in response to the new crown pandemic, the overall output decline was the largest since the global financial crisis, which shows that the economy is likely to shrink for the third consecutive quarter.
As the US economy contracted for two consecutive quarters, the market once expected Fed to relax its tightening policy aimed at curbing the highest level of inflation since the 1980s, but several Fed officials denied it overnight; the probability of the Fed hike for the third consecutive rate hike for 75 basis points in September approaching 50%;
Chicago Fed Chairman Evans said that he does not rule out the possibility of another super-large rate hike at the next meeting of the Federal Reserve from September 20 to 21;
San Francisco Fed Chairman Daley said that he was too confident that it would be a mistake to solve the inflation problem, and the Fed still has a lot of work to do, which means higher interest rates.
【3】 OPEC + agreed to increase production slightly in September;
OPEC+ agreed to increase production by 100,000 barrels per day in September. At a time of tight market supply, this is far lower than OPEC+'s increase in production in recent months. OPEC+ had previously agreed to increase production by more than 600,000 barrels per day in July and August. Delegates at the meeting revealed that ministers from all countries supported this proposal to increase production. The delegates also said that OPEC+ will allocate the increase in production quotas among member countries in proportion. Algeria Energy Minister said oil demand was lower than expected and OPEC+'s decision was to meet demand.
OPEC+ Conference Statement: Inadequate investment will affect whether the oil supply to meet growing demand after 2023. The availability of excess capacity is very limited, so it must be used with great caution when dealing with severe supply disruptions.
In recent months, OPEC+ has only fulfilled a small part of its commitment to increase production, as only Saudi and the UAE have the ability to increase production. However, the agreement is a weak sign that Saudi Arabia and the United States are heading towards a reconciliation path
market believes that it is not enough to resolve the current market tension. This may be just a verbal commitment to the US call for increased production, but as a symbolic gesture, its impact is greater than other aspects and there is no pressure on oil prices, which explains why oil prices are rising. Traders will be concerned about whether the U.S. side will respond in any way. It is hard to see White House satisfied with this, especially shortly after US President Biden visited Saudi Arabia , OPEC+ made the decision.
Senior U.S. government official: The decision to increase production is to take a step forward, and the United States hopes to see more actions from OPEC+; Biden will promote an increase in energy supply at home and abroad. White House: The United States wants to see an increase in oil production and saw this in June, with the Biden administration focusing on lowering prices.
This article is from the Energy R&D Center
