On August 5, the U.S. WTI crude oil futures market prices rose, with the settlement price of main contracts at $42.19/ barrel, up $0.49. Brent crude oil futures market prices rose, with the settlement price of main contracts at $45.17/ barrel, up $0.74. Oil prices rose to the highest level since the beginning of March, due to the sharp reduction of US crude oil inventories, combined with the continued weakening of the US dollar.
U.S. crude oil inventories fell sharply last week, according to a report released by the US Energy Information Agency (EIA) on Wednesday; US crude oil inventories fell by 7.4 million barrels in the week ended July 31, with analysts expecting a decrease of 3 million barrels. Inventory data was positive for oil prices. After the report was released late on Wednesday, oil prices rose, and WTI and Brent reached their highest levels since early March.
In addition, from the macro level, the continued weakening of the US dollar is good for the commodity market. The depreciation of the US dollar will bring a certain degree of premium to commodities and also support the current oil price. Moreover, a new round of U.S. economic stimulus plan is brewing, which is still under urgent negotiation. Although there are still differences on key details, both the White House and the Democratic Party hope to reach a consensus on the stimulus plan within this week. The favorable macro level is an important driving force for oil prices to maintain a high level of consolidation.
However, in terms of supply and demand, the current crude oil market is still not optimistic. With the end of OPEC+ record production reduction, many oil producing countries have the intention to reduce the scale of production reduction, and there is still a large risk in the supply side. Especially in the current situation of severe suppression of the epidemic situation, energy demand continues to be depressed. From the US EIA inventory data released yesterday, we can also see that, although crude oil stocks fell sharply, gasoline and distillate oil inventories continued to grow. Moreover, gasoline inventories increased for the second consecutive week and distillate oil inventories increased for the third consecutive week. This reflects that the downstream demand has not fundamentally improved, the performance of summer driving season is not satisfactory, and as the peak season draws to a close, there is a risk of further decline in gasoline demand. The decline of crude oil inventory is mainly due to the decline of import volume.
In the near future, oil prices may continue to consolidate. Under the background of continuous tension between China and the United States and the severe suppression of the epidemic situation, the current situation of the oil market is relatively complex. The supply and demand side is basically balanced. In the later stage, the relaxation and reduction of oil production in oil producing countries may bring certain supply risks. Therefore, we should be cautious and optimistic about the impact of the epidemic situation on the demand.
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