On October 19, international crude oil futures rose. The settlement price of the main contract of U.S. WTI crude oil futures was 84.52 dollars/barrel, up 2.45 dollars or 2.99%; The settlement price of the main contract of Brent crude oil futures was 92.41 dollars/barrel, up 2.38 dollars or 2.64%.
In the previous three trading days, oil prices fell one after another, and WTI crude oil fell by nearly 8%. The main reason is that under the background of high global inflation, the market has strengthened the expectation of the central bank to raise interest rates significantly, the expectation of economic recession risk has weakened the fuel demand, and short-term hedged the positive impact of the Organization of Petroleum Exporting Countries (OPEC+) and its allies' (OPEC+) sharp production reduction.
On Wednesday, the oil price rebounded nearly 3%, mainly due to the good supply side. The US Energy Information Administration (EIA) report shows that crude oil stocks fell more than expected, and the supply tightening offset the negative impact of slowing demand and the release of SPR from the US strategic crude oil reserves.
Since the Organization of Petroleum Exporting Countries and its allies (OPEC+) agreed to cut their production target by 2 million barrels per day at the beginning of this month, the expectation of tight crude oil supply has led to a rise in oil prices. Although the release of reserves in the United States followed, 15 million barrels is difficult to offset the loss of OPEC+ production reduction. Superimposed last week, the SPR inventory of the US strategic crude oil reserve fell by 3.6 million barrels to 405 million barrels, which is the lowest level since May 1984, indicating that the space for US to release reserves in the later period was very limited. Biden also said that this would be the last batch of sales in the 180 million barrel release plan announced since the outbreak of the Russian Ukrainian conflict. The supply of crude oil is always expected to tighten in the future.
In addition, this Wednesday, the US Energy Information Administration (EIA) routinely released inventory data, and the US crude oil inventory unexpectedly decreased. According to the data, as of the week of October 14, the US crude oil inventory decreased by 1.7 million barrels to 437.4 million barrels. The analysts surveyed earlier expected an increase of 1.4 million barrels. The unexpected decline in inventories was mainly due to the fact that the operating rate of refineries remained at a medium high level, and the current demand in North America was still relatively strong, which made the market more worried about the tight supply.
In addition, Biden also said that if the oil price drops to about $70, the United States will buy back the crude oil to make up for the strategic reserve SPR, which will undoubtedly benefit the market in the medium and long term, so the supply side will still benefit the oil price in the future. On the demand side, inflation in Europe and the United States remains high, and the probability of the Federal Reserve's further aggressive interest rate increases, which will further increase the risk of economic recession, thereby depressing oil demand. Therefore, in the future, the supply and demand sides of the oil market will increase the game, and the oil price probability will remain volatile, which will make it difficult to go out of a clear direction in the short term.
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