On September 14th, international crude oil futures rose significantly. The settlement price of the main contract for US WTI crude oil futures was $90.16 per barrel, up $1.64 or 1.9%. This year, WTI reached the $90 level for the first time, reaching a new high since November 2022. The settlement price of the main contract for Brent crude oil futures was $93.70 per barrel, an increase of $1.82 or 2.0%. The main reason is that the expectation of supply tightening has overshadowed concerns about slowing economic growth and increasing US inventory.
On Wednesday, the International Energy Agency (IEA) announced that the Petroleum Exporting Organization and its allies (OPEC+) have extended the deadline for production cuts, while leading countries Saudi Arabia and Russia have extended their plans to cut crude oil supply by 1.3 million barrels per day until the end of the year. Due to the significant continuous supply gap caused by production cuts, it may lead to tight crude oil supply in the fourth quarter, and institutions and investors are generally bullish on oil prices. Although the US Energy Information Administration (EIA) released an unexpected increase in crude oil inventories on Wednesday, this positive news did not shake the market's perception of supply expectations concerns.
Specifically, the EIA report released on Wednesday showed that US crude oil inventories unexpectedly increased by 4 million barrels last week, with analysts expecting a decrease of approximately 1.9 million barrels. The inventory of finished oil depots has also increased. After the report was released, oil prices briefly corrected and then resumed their upward trend. This indicates that the market still holds strong bullish expectations despite the lack of improvement in short-term demand.
On the demand side, the demand for gasoline and diesel in the United States remains strong, especially with a significant increase in diesel futures. As the weather turns colder and winter approaches in the northern hemisphere, the peak season for heating oil demand begins, and the market remains optimistic.
On a macro level, recent economic data has also shown good performance, with retail sales in the United States growing 0.6% month on month in August, higher than expected growth of 0.2%. Last week, the number of initial claims for unemployment benefits increased to 220000, but lower than the expected 225000. The producer price index (PPI) of final demand in August increased by 0.7% month on month, higher than the expected 0.4% increase. The rebound in economic data indicates strong demand in the United States. In addition, China has recently introduced a series of positive measures. The People's Bank of China announced on the 14th that it has decided to lower the reserve requirement ratio of financial institutions by 0.25 percentage points on September 15, 2023, which has also played a positive role in boosting market expectations.
In the future, SunSirs crude oil analysts believe that both macro and fundamental factors will support oil prices in the short term. It is expected that oil prices will maintain a strong trend in the expectation of tight supply. However, currently prices are at a relatively high level, and the market should be vigilant against the correction caused by the release of bearish news.
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