International crude oil prices have been rising recently. On August 24, the Brent price was US$101.22 per barrel, rising to the highest level since August 1. Source: OPEC+ may resume production cuts in the future, U.S. commercial crude oil inventories have declined, and there are still concerns about European energy supply. Market attention has once again turned to the risk of tight supply, easing concerns that a potential economic recession may suppress demand, boosting oil prices this week Upward. At present, the crude oil market should focus on the following aspects:
1. OPEC+ is considering cutting production in advance to boost the crude oil futures market sentiment.
The Saudi Energy Minister said that OPEC+ has the commitment, flexibility and means to respond to challenges and provide guidance, including reducing production in different forms at any time. Negotiations on the Iranian nuclear issue have released positive signals and expectations for potential supply increases have emerged, which is the main reason why OPEC+ is considering cutting production in preparation for a rainy day. The announcement of this news boosted the crude oil futures market sentiment.
2. U.S. commercial crude oil inventories fell more than expected
In the week of August 19, U.S. commercial crude oil inventories fell more than expected, the largest decline since April 23 this year. Crude oil inventories will reach 421.672 million barrels, a decrease of 3.28 million barrels from the previous week and about 6% lower than the same period in the past five years. Since the beginning of this year, U.S. crude oil inventories have continued to be at the lower limit of the past five years, providing positive support for oil prices.
3. A strong U.S. dollar is bad for oil prices
The average value of the U.S. dollar index this week was +2.15% from last week to 108.37. The U.S. dollar index has risen strongly, making crude oil more expensive for buyers holding other currencies. As major European central banks have sharply raised interest rates to curb soaring inflation, which has slowed economic activity and weakened demand for crude oil. At the same time, the Federal Reserve continues to tighten monetary policy. The possibility of raising interest rates by 75 basis points in September is as high as 50% in the medium term. Will continue to form a negative restraint on oil prices.
4. The situation between Russia and Ukraine remains anxious and the supply shortage is difficult to alleviate.
Explosions occurred near areas of Ukraine controlled by Russia and military bases in Russia, indicating that the military war between Russia and Ukraine will be difficult to end in a short time and may escalate. The resulting supply shortage will be alleviated in the short term, limiting the decline in oil prices. .
5. The market is worried about changes in the Iran nuclear agreement, boosting oil prices during the session.
According to Al Arabiya TV, the United States has rejected all additional conditions proposed by Iran and urged Iran to lift any restrictions on international inspections. Oil prices reversed intraday losses and trended upward.
To sum up, in terms of current crude oil market supply, OPEC+ may subsequently reduce production. In addition, negotiations between the United States and Iran are difficult to achieve overnight, and the overall supply situation is still tight. In terms of demand, the northern hemisphere is still in the peak summer travel season, and the seasonal positive support for demand continues. In terms of inventories, U.S. crude oil and refined oil products continue to run at low levels, reflecting relatively strong demand, which brings upward momentum to crude oil prices. To sum up, the current crude oil market is still in a state of tight balance, and international crude oil prices are expected to continue to run at high levels.
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