On March 18, the price of WTI crude oil futures market in the United States fell sharply, with the settlement price of the main contract at $60.06/ barrel, down $4.57/ barrel or 7.07%. Brent crude oil futures market prices fell sharply, the settlement price of the main contract at $63.03/ barrel, down $4.97/ barrel or 7.30%. WTI and Brent oil prices both fell by more than 7% on Thursday. At present, they have fallen for five consecutive trading days, mainly due to the slowdown of vaccination in Europe, which depresses the momentum of economic recovery, as well as the strong trend of US dollar, the increase of US crude oil inventory, and the added disturbance of bad news such as tense relations between the US and Russia.
According to SunSirs, oil prices have been falling for five consecutive trading days. At the macro level, due to the accommodation of the Federal Reserve and central banks, inflation expectations continued to rise, US bond yields rose, and the prices of risky assets such as stock markets and commodities were suppressed. On Thursday, the market's expectation of inflation intensified, and the US bond selling wave hit. The yield of 10-year US bonds rose above 1.7% for the first time in 14 months. The strength of the US dollar affected the decline of the stock index, and the oil price also fell sharply. WTI and Brent crude oil fell to two-week lows one after another. WTI closed below $60, and WTI crude oil hit the biggest one-day decline in the second half of the year.
In addition, the pace of global economic recovery was once again dragged down by the epidemic, this time mainly from the European region. The European vaccination process was blocked, which led to the expectation of a slowdown in economic recovery and the suppression of oil prices.
The continuous recovery of crude oil inventories has also brought pressure on oil prices. US crude oil and refined oil inventories rose again. According to the inventory data released by the US Energy Information Administration (EIA) on Wednesday, US crude oil inventories increased in the week of March 12, while gasoline and distillate inventories also increased. Us crude oil inventories increased 2.396 million barrels, to 500.799 billion barrels, and US gasoline inventories increased 472 million barrels, to 232.075 billion barrels The increase in gasoline inventory was mainly affected by the recovery of us refinery operation rate and the lower than expected demand growth.
The supply side of oil prices is also at risk. Recently, the tense relationship between the United States and Russia has intensified the market's worry, mainly because the US published a report on Russia's intervention in the US general election, which has intensified the relationship between the two countries. At the same time, Russia recalled its ambassador to the US, and the US threatened to sanction Russia. The market is generally worried about Russia's retaliation, because the main measure may be to increase crude oil production to crack down on American shale oil. Tensions between the two countries also put downward pressure on oil prices.
According to SunSirs, the recent continuous drop in oil prices and the concentrated release of bad news in the market may only be temporary in the short term, and the process of market recovery remains unchanged. The main risk factor of supply and demand lies in the relationship between the United States and Russia. The policy of controlling production in the later period of OPEC may also be restricted by this. In the near future, there may be many factors disturbing the oil price, and the amplitude will increase. In the long run, economic recovery is still good for crude oil prices.
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