On August 9th, international crude oil futures continued their upward trend, with US WTI crude oil rising nearly 2%, reaching a nearly 9-month high. The settlement price of the main contract for WTI crude oil futures in the United States was $84.40 per barrel, up $1.48 or 1.8%. The settlement price of the Brent crude oil futures main contract was $87.55 per barrel, an increase of $1.38 or 1.6%. The main reason is that market supply concerns continue to ferment, coupled with the phased positive trend of the peak oil consumption season.
Previously, the Ministerial Meeting of the Organization of Petroleum Exporting Countries and its allies (OPEC+) decided to continue the previous production reduction scale and extended the additional production reduction period in Saudi Arabia. The Saudi Ministry of Energy has extended the voluntary additional production reduction in July until the end of September, while retaining the option to extend the production reduction again in response to market conditions. Starting from May this year, Saudi Arabia has voluntarily reduced production by 500,000 barrels per day, combined with a further reduction of 1 million barrels per day from July to September, indicating that Saudi Arabia's daily crude oil production has decreased to approximately 9 million barrels. Meanwhile, Russia has also stated that it will reduce its oil exports by 300,000 barrels per day in September.
Under the influence of OPEC+ tightening supply in oil producing countries, inventory continues to decrease. Previously, as of the week ending July 28th, US EIA crude oil inventories plummeted by 17.049 million barrels to 440 million barrels, marking the largest weekly decline in history and far exceeding expectations. In the past week, there has been a significant decrease in finished oil storage. The US Energy Information Administration (EIA) report shows a decrease in finished oil storage in the United States last week. According to the EIA report, as of the week ending August 4th, US gasoline inventories decreased by 2.7 million barrels to 216.42 million barrels, after analysts had expected inventories to remain almost unchanged. The decrease in finished oil storage continues to benefit the oil market.
In the short term, there is a seasonal rebound in fuel consumption. The third quarter is the traditional peak driving season in North America. Summer aviation and short distance travel bring benefits to the aviation coal and gasoline markets. Coupled with the initiation of Chinese demand, the rebound in consumption brought about by the graduation season travel, and the support of many stimulus policies, the oil market has seen consumption growth in the short term. However, the market generally believes that this is a phased process, and as the peak consumption season ends, the oil market may face a demand gap in the fourth quarter, which will lay hidden dangers for the oil market.
SunSirs crude oil analysts believe that the continued upward trend of international crude oil is mainly driven by favorable supply. Under the support of the short-term peak oil consumption season, the sustained large-scale production reduction by OPEC+, an oil producing country, has strengthened the expectation of tight market supply. The oil market is expected to hit the $90 mark in the short term. However, in the medium to long term, there is still uncertainty in the oil market. On the one hand, the fundamentals and fuel demand may experience a certain degree of retreat in the fourth quarter. On the other hand, the market should be vigilant against the recession caused by the high interest rate environment in Europe and America in the global economy. This will bring downside risks to the oil market. Overall, the oil market will continue to maintain a strong pattern in the near future, and there may be a risk of a pullback in the medium to long term.
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