Oil prices rose further on Friday after Russian Deputy Prime Minister Alexander Novak said Russia would not rule out imposing quotas on oil product exports to stabilize domestic gasoline prices. Obviously investors have become nervous about the continued tightening of the supply side, and the market is sensitive to this. Since Saudi Arabia announced in early July that it would extend its voluntary production cut of 1 million barrels per day from July to August, Russia has also cooperated in promoting that it will reduce exports by 500,000 barrels per day in August. The unanimous stance of oil-producing countries has conveyed to the market its With the willingness to support prices, oil prices then started the largest round of rise in three months. As oil prices rose, speculators began to cover their long positions, especially the net long positions in U.S. WTI crude oil. As of the week of July 18, speculative net long positions in WTI crude oil futures continued to increase by 46,701 lots to 152,812 lots. , speculative net long positions have increased significantly for three consecutive weeks. What is interesting is that the speculative net long position of Brent crude oil has fallen sharply. The U.S. Cushing inventory has fallen sharply in the past two weeks. The trend of WTI crude oil has been stronger than that of Brent crude oil recently. The weakening of cross-regional price differences has triggered the deployment of speculative positions.
After hitting $80 per barrel, Brent crude oil has been fluctuating around this mark in the past week. Judging from the performance of oil prices in the first half of the year, this is also the intersection area between the fluctuation ranges of the first quarter and the second quarter. This also means that there are two different expectations for oil prices to be above 80 US dollars per barrel and below 80 US dollars per barrel. Confidence in the crude oil market continued to decline in the first half of the year, and after July, the crude oil market began to show some changes that were obviously different from those in the second quarter. As oil prices rebounded from the low point of nearly 10 US dollars per barrel, it meant that investors were concerned about oil prices. Improvement in market outlook expectations. While investor expectations have improved, some positive signals in the crude oil market have also begun to appear. The near-end monthly difference has reverted from a discount structure to a slight premium, and the crack difference of refined oil products in the European and American markets has strengthened recently. The Chinese diesel market has also experienced a sharp rise in the past week, which means that the downstream consumer end of the crude oil market has matched the strengthening of oil prices. , laying a solid foundation for the rise in oil prices.
The performance of oil prices in the first half of the year made investors full of doubts about the effectiveness of OPEC+ production cuts, but the scale of OPEC+ production cuts continued to escalate, from 2 million barrels per day to 3.66 million barrels per day, then to 4.6 million barrels per day, and then to early July Saudi Arabia and Russia continue to join forces to deepen production cuts. Although the market had generally doubted the fragility of OPEC+’s internal unity, judging from the recent actions and statements of all parties, all parties in the oil-exporting countries have overcome potential challenges and maintained a unified position. The UAE Energy Minister also emphasized on Friday that the current OPEC+ actions are sufficient for the oil market, saying that he is not worried about oil demand and calling investment in production capacity the “biggest challenge.” If more action is needed, OPEC+ is “just a phone call away”. There is a “mechanism” to monitor Russian oil production, which will be developed together with OPEC headquarters. Such a statement shows that the cooperative relationship between the core countries within OPEC is still relatively strong. At the same time, combined with the remarks of Saudi Arabia and the United Arab Emirates, it can be seen that they are wary of Russia, which is a potential unstable factor. From the perspective of OPEC production, there has been a significant decline this year, while domestic crude oil production in the United States has remained unchanged at 12.30 million barrels per day. In the week ended July 21, the number of oil rigs drilling in the United States decreased by 7 from the previous month to 530, a decrease of 69 compared with the same period last year. As production efficiency improves, the decline in the number of rigs has not caused a decline in shale oil production, but it can be seen that U.S. production growth has slowed down significantly this year.
EIA weekly data showed that U.S. commercial crude oil inventories fell by 708,000 barrels in the week to July 14, compared with expectations for a decrease of 2.44 million barrels, and an increase of 5.946 million barrels from the previous value. Crude oil inventories in Cushing, Oklahoma, fell by 2.891 million barrels, compared with the previous decrease of 1.605 million barrels. Strategic Petroleum Reserve (SPR) inventories increased by 1,000 barrels to 346.8 million barrels. Gasoline inventories fell by 1.066 million barrels, compared with expectations for a decline of 1.577 million barrels. Refined oil inventories increased by 13,000 barrels, compared with an expected increase of 460,000 barrels. The extended demand data for crude oil production was 19.5751 million barrels per day, compared with the previous value of 17.331 million barrels per day. The extended demand data for total vehicle gasoline production was 9.9269 million barrels per day, compared with the previous value of 9.8721 million barrels per day. The four-week average supply of U.S. crude oil products was 20.252 million barrels per day, an increase of 1.0% from the same period last year. U.S. crude oil demand has risen significantly and is higher than the historical average for the same period. At the same time, the processing volume from the refinery perspective also increased slightly month-on-month, and crude oil demand strengthened marginally in the week of June 9. In addition, the domestic diesel market has experienced a sharp rise in the past week, with a cumulative increase of more than 600 yuan/ton since July, which has boosted market expectations. Previously, the International Energy Agency and OPEC maintained high expectations for the growth of Chinese market demand. Domestic refined oil products Whether the strong performance can be continued has a critical impact on market mentality.
In the past period, the deepening of OPEC+ production cuts has improved the supply and demand outlook in the second half of the year, and the commodity market has also maintained a high risk appetite atmosphere, which has provided conditions for a recovery in oil prices. As oil prices rebound from year-to-date lows10USD/barrel, getting rid of the weak situation in the second quarter, which helps to further improve market expectations and boost market confidence. The current oil price is near the central axis of the large oscillation range in the first half of the year, and the long-short tug-of-war is also taking place as scheduled. At present, major institutions are generally inclined to be cautiously bullish in their judgments on oil prices. It is generally believed that the tightening of supply caused by OPEC+ production cuts has promoted the rise in oil prices. However, it is difficult for oil prices to continue to rise strongly and exceed expectations only by the tightening of supply. Therefore, it is generally judged that oil prices will still operate within the range in the first half of the year, and the high point of oil prices during the year is expected to be around US$90/barrel. Whether the final demand-side performance can be strong as expected will play a key role in the subsequent upward trend of oil prices.
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