On March 13th, international crude oil futures saw a significant increase of nearly 3%. The settlement price of the main WTI crude oil futures contract in the United States was $79.72 per barrel, up $2.16 or 2.8%. The settlement price of Brent crude oil futures main contract was reported at $84.03 per barrel, an increase of $2.11 or 2.6%. The main reason is that the US EIA inventory data is positive, coupled with Ukraine's attack on Russian refineries, geopolitical tensions have pushed up the risk premium of crude oil.

EIA: US crude oil inventories decrease, gasoline inventories decrease more than expected

The report released by the US Energy Information Agency (EIA) on Wednesday has been positive for the market. Specifically, as of the week ending March 8th, US crude oil inventories decreased by 1.5 million barrels to 4,469.9 million barrels, with a market estimate of an increase of 1.3 million barrels. The crude oil inventory data exceeded market expectations. In addition, the processing volume of US refineries increased by 390,000 barrels per day this week, and the capacity utilization rate increased by 1.9% compared to the previous week to 86.8%, indicating an increase in refinery operating rates.

In addition, during the week of March 8th, US gasoline inventories decreased by 5.7 million barrels to 234.08 million barrels, following market estimates of a decrease of 1.9 million barrels; Except for the West Coast, inventory in all major refining centers has decreased. The gasoline inventory along the Gulf Coast of the United States decreased by 588,000 barrels to 78.4 million barrels, the lowest level since November 2022. This indicates that gasoline supply is tight, and downstream demand remains relatively strong.

Ukraine's attack on Russian refineries raises supply concerns

On the early morning of the 13th local time, Ukrainian drones launched attacks on three oil refineries located in Russia, which is a continuation of a series of special operations launched by Ukraine recently against energy facilities in Russia's rear. The Russian side stated that Rosneft's largest refinery caught fire, possibly due to a drone crash. According to TASS, the fire caused 2 injuries.

Market insiders believe that due to the Ukrainian drone attack on Russia's largest refinery, it may affect Russia's refining capacity in the short term, which may lead to a decrease in Russia's exports of refined oil in the short term. Concerns about tight supply expectations have led to higher oil prices.

OPEC Monthly Report: Optimistic Expectations for Global Crude Oil Demand in 2024

On the evening of Tuesday (12th) Beijing time, the Organization of the Petroleum Exporting Countries (OPEC) released its latest monthly crude oil market report. The latest monthly report from OPEC remains optimistic about oil demand in 2024 and 2025. The monthly report shows that OPEC expects global oil consumption to grow "strongly" by 2.25 million barrels per day in 2024, reaching a record breaking 104.5 million barrels per day. In 2025, it will increase by 1.85 million barrels per day. And further improved this year's economic growth forecast, stating that there is still greater room for improvement.

In addition, the OPEC ministerial meeting at the beginning of last week also continued the policy of reducing production. OPEC+member countries, led by Saudi Arabia and Russia, agreed to extend the voluntary production reduction agreement of 2.2 million barrels per day until the second quarter. Although the production reduction only extended and did not deepen the share of production reduction, it also played a certain role in boosting oil prices.

SunSirs crude oil analysts believe that currently crude oil is still in a volatile range, and there is a macroeconomic impact of the depreciation of the US dollar reshaping oil price valuation expectations. The supply side faces a situation of mutual competition between geopolitical tensions and high oil production in the United States. On the demand side, the recovery of demand in China and the tight supply of refined oil caused by the maintenance of refineries in North America have had an impact. Taking all factors into consideration, in the short term, crude oil will still maintain an adjustment range under the supply-demand game, but excessive market news will cause strong volatility in the oil market, and it is not ruled out that there is a possibility of further upward breakthroughs.

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