International crude oil prices have risen for two consecutive weeks due to the impact of the Federal Reserve’s interest rate hikes, the easing of macro-recession sentiment, and continued tight supply and demand. On the 29th, domestic and foreign crude oil prices rose hand in hand. In terms of domestic trading, the main crude oil contract 2209 showed a “V-shaped” trend, rising nearly 2% in early trading. Then the intraday increase narrowed, and it was not until the end of the trading that it rose again by nearly 2%. As of the close, the increase reached 1.76%, closing at 686.6 yuan/ton. The main crude oil contract 2209 in night trading still performed strongly.
“Oil prices have continued to recover in the past two weeks due to two reasons. First, the macro recession sentiment has eased, and industrial products have rebounded and resonated after a sharp decline; second, there is still uncertainty in the supply of the oil market, resulting in continued supply elasticity in oil prices.” Zhong Meiyan, research director of the Energy and Chemical Industry Department of Everbright Futures Research Institute, said.
According to Dong Chao, senior energy analyst at Shenyin Wanguo Futures, Biden’s visit to Saudi Arabia did not receive a response from Saudi Arabia for increasing production, and U.S. crude oil and refined oil inventories fell more than expected this week, indicating that demand has picked up, which is also the case for recent oil prices. Reasons to go higher. In addition, the gas transmission volume of Russia’s Nord Stream 1 gas pipeline to Europe dropped from 40% to 20%. The market once again raised concerns about energy security, and oil prices also rose accordingly.
According to reports, in the past week, including strategic inventories, U.S. crude oil inventories fell by 10.13 million barrels, and refined oil inventories fell by 4.08 million barrels. However, total U.S. crude oil imports fell by 7.98 million barrels month-on-month that week, while total refined oil exports increased by 5.39 million barrels. “In other words, the main reason for the decline in U.S. inventories in the past week is due to the continued selling of reserves in the United States, which has led to low domestic prices and increased exports. In fact, there has been no significant change in the global crude oil supply and demand pattern.” Dong Chao said.
In this regard, Zhong Meiyan said that the United States continues to invest in strategic petroleum reserves, on the one hand to cope with the demand for crude oil due to the high operation of domestic refineries; on the other hand, crude oil exports have risen sharply. As of July 22, data show that the United States exported 455 million crude oil last week. million barrels per day, a record high, and export volume surged 21% in a single week. Mainly due to the widening of WTI and Brent discounts, U.S. crude oil exports are expected to remain strong in the coming weeks. In addition, weekly crude oil and refined oil inventories both fell, and the peak travel season still provides support for demand.
“In terms of actual consumption, the negative impact of high inflation on demand has been evident since the second quarter. EIA’s latest weekly gasoline consumption has rebounded from the lows of the past two weeks, but is still lower than seasonal levels in previous years. The crack spread continues to fall. China’s market demand is expected to continue its recovery trend, but the epidemic still poses a disturbance. Global onshore crude oil inventories continue to be depleted, and the absolute level remains low, mainly relying on the continued decline of US SPR inventories, and the refinery operating rate remains high, which keeps the crude oil processing volume high. However, As crack spreads weaken and seasonal maintenance approaches, refinery operating rates may decline marginally in the future.” An Ziwei, senior energy analyst at Orient Securities Futures Derivatives Research Institute, said.
Last week, the Federal Reserve took action to raise interest rates, announcing a rate hike of 75 basis points to a range of 2.25% to 2.5%. What impact will this have on the international oil market?
In this regard, Dong Chao believes that the Fed’s interest rate hike of 75 basis points is a big negative in itself, not to mention that the Fed’s interest rate hike will trigger the global central banks to follow suit. Previously, the European Central Bank simultaneously raised interest rates by 50 basis points. Affected by this, the global economy may fall into recession, and the International Monetary Fund recently lowered its GDP forecast for this year and next. However, this factor has been released in advance, so oil prices did not fall after the news was announced. Instead, they rebounded because there was no more aggressive 100 basis point interest rate hike policy.
“Federal Reserve Chairman Powell’s speech was dovish, and monetary policy weighed between inflation and growth, which represents a signal of a marginal shift in monetary policy and may drive a short-term recovery in market risk appetite.” An Ziwei said.
Zhong Meiyan believes that judging from the path of the Fed’s interest rate hikes, interest rate hikes will bring about recession and slowdown in demand. However, from a historical review, we can see that there is no clear path dependence between interest rate hikes and oil prices, there is no obvious negative correlation, and there is a lag. From the perspective of theoretical transmission logic, the Fed’s interest rate hikes lead to a stronger U.S. dollar, which in turn causes dollar-denominated commodity prices to fall under pressure. However, the current game in the crude oil market is still continuing. The uncertainty on the supply side caused by the Russia-Ukraine conflict and sanctions against Russia will still lead to prominent structural contradictions in the supply of the energy market, and energy prices will therefore remain high for a long time.
</p
