On October 25, WTI crude oil futures market rose to 56.66 USD / barrel, or 0.43 USD, while Brent crude oil futures rose to 62.02 USD / barrel, or 0.35 USD.
Abundant crude oil supply
The current supply stability factor of crude oil is due to the relatively stable shale oil production in the United States. Last week, the domestic crude oil production in the United States continued to maintain a record high of 12.6 million barrels / day, and the oil well production rate exceeded 100% for two consecutive months in the Permian, indicating that the crude oil transportation pipeline is gradually put into use, the crude oil transportation pressure has been eased, the transportation cost has been reduced, and the crude oil in the United States has remained high-yield.
Moreover, at present, the intensity of OPEC + production reduction is uneven, mainly relying on Saudi Arabia's contribution to the absolute value of production reduction. The source said OPEC + will continue to expand production reduction efforts at the December meeting, but for now, the shaping of this policy still depends on time and unity within OPEC +. At present, there are certain hidden dangers. Since the extension of the crude oil production reduction agreement in July, the crude oil production of various countries has not changed much. Saudi Arabia is still the main country of production reduction. The subjective production reduction of other countries is not strong. Iran and Venezuela are passive production reduction. However, the market has adapted to the gradually reduced crude oil production, more importantly, the risk premium of crude oil caused by geographical conflict.
Global demand expectations are still hard to change
In the past few months, many institutions have given clear views on the expected slowdown of the global economy, and the International Energy Agency (IEA) and the organization of Petroleum Exporting Countries (OPEC) have made unfavorable judgments on the future demand prospects of crude oil. The Federal Reserve and many central banks have released monetary easing signals, and the current economic data shows that the economy is still relatively cold.
In October, the manufacturing PMI of euro area was 45.7, which was the same as that of last month. Among them, the manufacturing PMI of Germany was 41.9, up 0.2 on a month on month basis, with a small increase, still at a historical low level. The initial value of the manufacturing PMI of Markit in the United States was 51.5, up 0.4 on a month on month basis. Although PMI in Europe and the United States rebounded in October, PMI in the euro area has been below the boom and bust line since the beginning of the year. The PMI in the U.S. Markit manufacturing industry is only slightly higher than the boom and bust line, and the PMI in the ISM manufacturing industry further fell to 47.8 in September. The small rebound of PMI data in Europe and the United States does not mean that the weak global macro-economy has improved. For the week ended October 12, 212000 people applied for unemployment benefits in the United States for the first time, down 6000 from last week. Despite the strong performance of the US employment market data, the breakdown of ISM manufacturing PMI employment shows that it has declined for three consecutive months. The downturn of manufacturing industry has led to a decline in labor demand, and the momentum of the labor market is gradually declining. The University of Michigan consumer confidence index ended at 95.5 in October, initially at 96, down 0.5 as consumer expectations for the economic outlook weakened.
On the whole
Analysts of SunSirs believes that the supply of crude oil is still sufficient and the weakening demand is a long-term trend. On the one hand, U.S. crude oil production remains high, and OPEC transmits the possibility of production reduction through information stimulation, but the substantial decline does not occur, and crude oil supply is relatively sufficient. In terms of demand, the global economic growth stalls in the future, affecting the expectation of crude oil demand. The contradiction of crude oil supply surplus is still the market risk point. It is expected that crude oil will be strong in the near future and still short in the long term.
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