Last Friday (July 7th), international crude oil futures saw a significant increase. The settlement price of the main contract for WTI crude oil futures in the United States was $73.86 per barrel, an increase of $2.06 or 2.9%. The settlement price of the Brent crude oil futures main contract was $78.47 per barrel, an increase of $1.95 or 2.6%. The expectation of tight supply due to OPEC tightening production in the oil producing country has overshadowed concerns about slowing demand due to the Federal Reserve's interest rate hike.

The decline of the US dollar provides support for crude oil

The US economic data for June was weak, and a closely watched report released by the Labor Department on Friday also showed that the number of jobs added in June was the lowest in two and a half years; The decline of US labor market data has lowered the expectation that the Federal Reserve will maintain high interest rates for a long time. The rapid decline of the US dollar has made the valuation of risky Business valuation, including crude oil denominated in US dollars, higher.

The production reduction of the OPEC and its allies (OPEC+) aggravates supply concerns

The largest oil exporting countries Saudi Arabia and Russia announced new production reduction measures last week, bringing the total production reduction of the OPEC+alliance to about 5 million barrels per day, accounting for approximately 5% of global oil demand. On July 3rd, the Saudi Ministry of Energy announced that it would extend the policy of reducing production by an additional 1 million barrels per day in July until August; In addition, on July 7th, the Russian Ministry of Energy also confirmed a reduction of 500,000 barrels per day in oil exports in August.

The United States purchased 6 million barrels of crude oil to fill its strategic oil reserves

In addition, the United States Department of Energy's plan to replenish the strategic oil reserve has also warmed up the oil market. On July 7, the US announced that it would purchase an additional 6 million barrels of crude oil to replenish the strategic oil reserve. The procurement plan will be carried out in October and November. Previously, the United States Department of Energy had announced the purchase of 6.3 million barrels of crude oil for the strategic reserve, and the recent bidding for the replenishment reserve will make the total purchase this year exceed 12 million barrels. The data report of the Energy Information Administration (EIA) on Wednesday showed that the crude oil inventory declined rapidly, and the supply side's positive overlap overshadowed the concern of weak demand expectations.

SunSirs crude oil analysts believe that in the short term, the tight supply and weak demand expectations will continue to play games, and at the same time, the geopolitical risks brought by the conflict between Ukraine and Russia; As well as the potential risk of a global economic recession leading to a decline in demand due to the expectation of a Fed rate hike, many factors will exacerbate the volatility of the oil market, and the range of volatility may be wider than before.

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