On Monday this week, oil prices fell sharply again, and the trend was somewhat different from that of other major asset classes. Oil prices rebounded on Tuesday.
“Oil prices fell sharply on Monday. The core factor is that global economic data show that economic downward pressure is gradually increasing.” Yang An, head of energy and chemical research and development at Haitong Futures, told a reporter from Futures Daily that data released on Monday showed that the euro zone’s manufacturing in July The final value of the industrial PMI fell below the boom-bust line and hit a new low since June 2020. This has increased the risk of economic recession in the region. Economic pressure has gradually dragged down oil prices from the demand side. European diesel has fallen sharply, leading to a sharp decline in crude oil prices. fell, and profits from cracking in European and American markets continued to decline.
Huang Liunan, a researcher at Guotai Junan Futures, believes that the continued weakening of overseas refined oil gross margins and the increase in Saudi Arabia’s external production in July also contributed to the decline in oil prices at the beginning of this week. In addition, geographical factors have also intensified the market’s pessimism on the demand side to a certain extent.
Yang An also mentioned that the rising geopolitical factors ultimately had a huge impact on market sentiment. Concerns increased and market risk appetite fell. Crude oil, an important strategic material, responded most sensitively to this, and oil prices fell sharply again. “In the recovery stage of an oscillatory rebound backed by support, the trend of oil prices is further evidence that the current negative factors are gradually taking over.”
As far as this week is concerned, Yang An believes that the market will focus on the OPEC+ monthly meeting on August 3. “This meeting is the first meeting after the new Kuwaiti Secretary-General of OPEC takes up his duties, and the original production cooperation of OPEC+ has expired. The subsequent production plan of OPEC is also the focus of the market. The market currently also has certain expectations for possible further production increases. “According to him, at this stage, the shape of oil prices continues to weaken. The monthly difference of WTI crude oil continues to weaken, and the monthly difference of Brent also narrows significantly. The structure has weakened. The key support of oil prices is once again at risk of falling. Once the level is effectively broken, market expectations Disruptive changes will occur.
“During the overall rebound in commodities at the end of July, the performance of crude oil has obviously begun to be weaker than that of other industrial products, and the upward momentum of oil prices is gradually fading. Judging from the overall operating rhythm of commodities, once the supply and demand situation shows signs of further decline in the later period, oil prices will be very It may lead the decline in commodities.” Yang An reminded.
Regarding oil prices in August, Huang Liunan said that he will maintain a bearish view for the time being. WTI crude oil and Brent crude oil may fall below 90 US dollars per barrel, and SC crude oil may fall below 570 yuan per barrel. He explained that, first, before inflation peaks, the market’s recession expectations for overseas economies will most likely not change. Although major asset classes have experienced various degrees of restorative rebound in the past week after being oversold previously, the sharp decline in service industry data of overseas economies in July and other macro indicators cross-confirmed the slowdown in economic momentum. Considering that the current overseas CPI is still at a historically high level, at least until the release of the new CPI data, it will be difficult to reverse the market’s expectations for the certainty of recession.
Second, the supply and demand of refined oil products at home and abroad continues to deteriorate. The Asia-Pacific region currently maintains its previous oversupply pattern. The market estimates that China will export a total of approximately 2.3 million tons of refined oil products in August, continuing to provide a marginal increase in the supply of refined oil products in the Asia-Pacific. Considering that the current domestic fixed asset investment growth rate has not improved significantly, it may not be easy to see an improvement in domestic demand for refined oil before September. In overseas markets, the crack spread of refined oil products has continued to weaken in the past week, continuing to confirm that the peak demand season has ended early.
In addition, from the perspective of global oil inventories, according to Huang Liunan, except for diesel inventories in the European ARA region which remain at a low level, European gasoline inventories, North American gasoline and diesel inventories, and Asia-Pacific gasoline and diesel inventories are all in the process of rapid accumulation. “Therefore, it is very far-fetched to explain the continued contraction in refined oil profits since July by simply using the fall in North American natural gas prices to drive down the price of power generation fuels. The early arrival of the inventory turning point is forcing the refinery’s comprehensive gross profit to shrink rapidly. And once the refinery’s comprehensive gross profit continues The contraction may drive northern hemisphere refineries to reduce their load in advance in the future, and directly drive the contraction of primary crude oil processing demand,” he said.
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