On Tuesday, oil prices continued to remain weak in both internal and external markets, with crude oil varieties falling in the internal market. As of the close of the day, the September contract of WTI crude oil futures fell by US$2.88/barrel to close at US$86.53/barrel, a decrease of 3.22%; the August contract of Brent crude oil futures fell by US$2.76/barrel and closed at US$92.34/barrel, a decrease of 3.22%. is 2.90%.
Zheng Mengqi, an energy and chemical researcher at Hizheng Futures, said in an interview with reporters that in general, the U.S. dollar index has rebounded again recently, coupled with expectations for an increase in crude oil supply, the crude oil price has weakened, thus driving the prices of high and low sulfur fuel oil from the cost side. Downward.
Judging from the news, Iran has submitted a written reply to the EU on the latest draft of the Vienna nuclear agreement talks. Iran believes that there are currently three main differences, and on two of them, the United States has expressed “verbal flexibility.” Iran’s Foreign Minister stated on the 15th that if the United States is based on reality and shows flexibility, a final agreement will be reached.
“Compared with Iran’s crude oil production of more than 3.8 million barrels per day when the United States withdrew from the Iran nuclear deal in 2018, Iran’s current crude oil production is less than 2.6 million barrels per day. We believe that once Iranian crude oil returns to the international market, on the one hand, there will be a large number of floating positions It will have an impact on market supply. On the other hand, as production recovers, there will be greater pressure on the crude oil supply side. In addition, it should be noted that Saudi Aramco previously stated that it can increase production to 12 million barrels at any time requested by the Saudi government. /day, compared with the output of 10.714 million barrels per day in July, there is still room for an increase of more than 1 million barrels per day.” Zheng Mengqi said.
According to Yang Jiaming, an analyst at CITIC Futures, the drop in oil prices by more than US$5 per barrel on Monday night basically reflects the expectation that Iranian crude oil will return to the market. If Iran’s production really returns in the future and seizes Saudi Arabia’s share, then the only way for Saudi Arabia to increase production is to increase production. Yes, Saudi Arabia has taken a firm stance on increasing production, and production has indeed continued to grow recently. “Generally speaking, on the supply side, global crude oil production continues to return, including the gradual increase in the implementation rate of OPEC’s production increase led by Saudi Arabia, Russia’s impact of sanctions being less than expected, and the Iranian nuclear agreement negotiations coming to an end, etc., which means that crude oil supply is gradually returning. The expectation of oversupply is gradually coming true.”
In terms of crude oil demand, Yang Jiaming said that before the Federal Reserve’s inflation target is reached, interest rate increases will continue, which means that crude oil demand will also continue to be under pressure. Therefore, from the perspective of fuel oil costs, crude oil is facing a situation of increased supply and falling demand, which is negative for fuel oil prices.
In addition, the U.S. retail sales data to be released on Wednesday evening is also worthy of attention. Zheng Mengqi told reporters that U.S. retail sales data in June increased by 1% month-on-month, and the market expected a month-on-month increase of 0.1% in July. If the final announced value significantly exceeds market expectations, macro risks will increase, and market expectations for the Federal Reserve’s aggressive interest rate hikes will rise; if the announced value declines significantly, economic recession expectations will continue to increase.
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