On Monday, February 2nd, international oil prices plummeted, with the settlement price of the March WTI crude oil futures contract in the United States at $62.14 per barrel, a decrease of $3.07 or 4.7%. The settlement price of Brent crude oil futures in April was $66.30 per barrel, a decrease of $3.02 or 4.4%. The easing of tensions in Iran has become the core cause of the decline in oil prices; At the same time, the strengthening of the US dollar and the forecast of warming temperatures in the United States have further intensified the downward pressure on oil prices.

Specifically, let's take a look:

US Iran restarts nuclear talks, easing geopolitical tensions

The recent negotiation signals released by both the US and Iran have significantly eased market concerns about the stability of Middle Eastern oil supply, pushing oil prices back from their high levels since January. The specific dynamics are as follows:

According to a comprehensive report by Xinhua News Agency, Iranian President Pezehezhian ordered the launch of nuclear negotiations with the United States on February 2, and Iran may hold high-level negotiations with the United States in the coming days; On the same day, White House and Israeli officials confirmed that US presidential envoy Witkov will arrive in Israel on the 3rd to pave the way for relevant consultations. Earlier on Saturday, Trump revealed to reporters that "Iran is engaged in serious dialogue with Washington. In addition, the Chairman of Iran's National Security Council, Larijani, has publicly stated that negotiations are being pushed forward.

It is worth noting that since January, Trump has repeatedly threatened to intervene in Iran, and his verbal threats have supported the sustained rise in oil prices. The expectation of geopolitical risks is one of the core supporting factors for the rise in oil prices in January, and the current negotiation signals in the market have flattened some of the risk premium of crude oil.

In addition to geopolitical factors, the strengthening of the US dollar and the expected warming of US weather also significantly suppressed oil prices on the day:

The strengthening of the US dollar and expectations of warmer weather suppress oil prices

The news of Trump's nomination of Kevin Warsh as Federal Reserve Chairman has shaken the market, as concerns about his hawkish policy expectations have directly driven the strengthening of the US dollar. Heavy blow to the commodity market. Both precious metals and the stock market are under selling pressure. Due to the fact that international crude oil is priced in US dollars, the appreciation of the US dollar will lead to an increase in the cost of purchasing crude oil for non US dollar currency holders, thereby suppressing global demand for crude oil and suppressing oil prices.

Expectations of warming weather lead to a decrease in heating oil demand

The weather forecast shows that temperatures in the United States will warm up in the future, directly leading to a decrease in heating demand expectations. Ritterbusch and Associates analyzed that weak heating demand has led to a significant drop in diesel futures prices, and the downward pressure on diesel futures has further transmitted to overall oil prices. On that day, the price of US diesel futures used for heating and power generation fell by over 6%, becoming an important driver dragging down oil prices.

Market outlook: Focus shifts to changes in global crude oil inventories

The crude oil analyst of Shengyi Society believes that the significant increase in international oil prices in January is mainly due to the combined effect of two core factors: the tense geopolitical situation in the Middle East and the disturbance of supply and demand caused by Trump's aggressive policies in the United States. As the current tensions between the US and Iran ease, the focus of future market attention is gradually returning to the fundamentals of inventory supply and demand.

From the supply side, OPEC held a meeting on Sunday and decided to maintain crude oil production unchanged in March. Previously, the OPEC meeting decided to suspend production in the first quarter, with the core reason being the expectation that global crude oil demand will enter a seasonally weak stage during this period, and maintaining current production is more in line with market supply and demand balance expectations. The expected future supply tends to be stable.

From the inventory data, the market's expectations for recent inventory changes in the United States are showing differentiation. On Monday, preliminary market research showed that as of the week ending January 30th, US crude oil inventories are expected to decrease by 300,000 barrels, while distillate oil inventories are expected to decrease simultaneously, and gasoline inventories may increase. Subsequently, it is necessary to pay attention to the crude oil inventory report from the US Energy Information Administration (EIA) on Wednesday.

Overall, the risk premium of oil prices has decreased, and prices have returned to the fundamentals of supply and demand. Recently, there have been mainly range oscillations, with the amplitude narrowing as geopolitical risks recede.

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