Galaxy Futures Investment Analyst Gao Bo
Futures Practice Certificate No.: F03134879
Futures Investment Consulting Certificate No.: Z0022121
Crude oil: a short-term rebound, and will still be under pressure in the medium and long term.
According to data from Alberta Wildfires and Alberta Energy Regulatory Authority, out-of-control wildfires are within ~10 kilometers, or threatening oil production of ~455,000 barrels per day, down from 462,000 barrels per day on Wednesday. Rain is expected to occur from Thursday to Saturday in the fire area near 6,500 hectares. The call between Chinese and US leaders has significantly improved macro sentiment, and oil prices have risen again during the session. Recently, there have been many disturbances in the news, and the expectation of OPEC production increases has been slightly digested. There is a lot of uncertainty in the geographic areas of Russia, Ukraine, the Middle East and the domestic environment of the United States. Oil prices have maintained a wide fluctuation pattern, and the upward space has been under pressure from the supply side for a long time. Overall, oil prices are still in a fluctuating range. Although there is a rebound in the intraday market, the upper resistance is strong and it is difficult to form an effective breakthrough. Judging from the current market situation, oil prices also lack obvious momentum for decline. The market is waiting for new drivers to emerge to break the current long-short stalemate pattern.
In terms of supply, last Saturday, eight OPEC member states agreed to continue to increase production by 411,000 barrels per day from next month. OPEC has increased its production three times in a row from May to July, and the increase in production is relatively large. The monthly month-on-month growth rate has remained stable at the level of 411,000 barrels per day. The cumulative increase in production has exceeded 1.2 million barrels per day mark, setting the largest supply expansion after the Saudi-led oil price war in 2020. Under the pressure of OPEC to increase production, the rise in oil prices is still limited. Less than a week after OPEC decided to accelerate production growth for the third consecutive month, Saudi Aramco issued a statement that the official price of Arab light crude oil shipped to Asia in July was set at $1.2 per barrel above the average of Oman/Dubai and below $1.40 per barrel in June, with the quotation level hitting a new low since 2021. The price is considered by the industry as a barometer of how Saudi Arabia viewed the demand outlook.
At the same time, all other lighter and medium-density ratings have also dropped prices, which the market believes is Saudi Arabia's attempt to regain market share. There are still hidden concerns about weak demand in the oil market. The latest data released by the EIA shows that the total amount of refined oil consumed by the United States per day in the past four weeks was 19.81 million barrels, a decrease of 0.9% from the same period last year. Among them, the average daily consumption of gasoline was 8.788 million barrels, 3.1% lower than last year; the average daily demand for distillate oil such as diesel was 3.558 million barrels, a year-on-year decrease of 4.3%; the consumption of aviation fuel was also reduced by 2.2% compared with last year. In the week ending May 30, total U.S. oil demand fell to 19.528 million barrels per day, a decrease of 714,000 barrels from the previous week. In the week ending May 30, U.S. commercial crude oil inventories fell sharply by 4.3 million barrels, far exceeding the market's expected decline of 1.03 million barrels, mainly due to the increased productivity of refineries. In the week ending May 30, inventory of refined oils such as gasoline and diesel increased instead of decreasing, with gasoline stocks soaring by 5.2 million barrels, and inventory of distillate oils such as diesel and heating oil also increased by 4.2 million barrels. Although the refinery is running at full capacity for production, the actual consumption demand in the terminal market has not kept up, resulting in a large backlog of refined oil. According to HSBC's latest supply and demand model, the oil market is expected to experience an excess of 300,000 barrels per day and 900,000 barrels per day in 2025 and 2026, higher than the previous estimates of 200,000 barrels per day and 700,000 barrels per day, driven by increased OPEC production. Earlier this week, Goldman Sachs said it expected OPEC to implement its final 410,000 bpd/dollar increase in production in August. Fitch-owned BMI analysts said in a report on Friday that the U.S. could increase sanctions on Venezuela to limit crude oil exports and Israel could attack Iran's infrastructure have increased the risk of rising oil prices. The Fed's interest rate cut could stimulate economic growth and oil demand. Data shows that as of the week ended June 6, the total number of oil and gas rigs in the U.S., the leading indicator of future production, fell by 4 to 559, the lowest level since November 2021. Baker Hughes' report shows that as of the week ending June 6, the number of active oil rigs in the United States fell by 9 to 442; the number of natural gas rigs increased by 5 to 114.
Overall, although crude oil rebounded in the short term due to easing trade negotiations and uncertainty in the supply of crude oil in Venezuela and Iran, it is still under pressure due to the increase in production and weak demand in the medium and long term.
Strategic Suggestions
In the short term, the callback is mainly closed at low short or waiting, and pay attention to the technical signals after the rebound is over in the medium term.
⚠️The above content is for reference only and does not constitute investment advice. The futures market is risky, so be cautious when entering the market. Galaxy wishes you a happy transaction~
