SunSirs: Analysis of the Impact of Drop in International Crude Oil Futures on the June 4

On June 4, international crude oil futures closed lower. The settlement price for the U.S. WTI crude oil futures contract for July delivery was $93.04 per barrel, a decline of $2.98 or 3.1%. The settlement price for the Brent crude oil futures contract for August delivery was $93.04 per barrel, a decline of $2.78 or 2.8%.

International crude oil futures saw a significant drop on June 4, with both the U.S. WTI July contract and the Brent August contract falling by nearly 3%. This development is directly bearish for crude oil spot and related futures prices; concerns regarding demand, combined with weakening prices, have exerted significant downward pressure on the crude oil market.

Asphalt costs are closely tied to crude oil; this sharp decline in crude oil prices directly weakens the cost support for asphalt, exerting a moderately bearish influence on both spot and futures prices. Although the main asphalt contract (2609) on the Shanghai Futures Exchange closed up by 36 RMB/tonne on June 4, the weakening cost side may drive a subsequent pullback in asphalt prices.

Gasoline is a direct downstream refined product of crude oil; the sharp drop in crude oil prices will lower gasoline production costs, exerting a moderately bearish influence on spot gasoline prices and driving a downward adjustment in the refined fuel market.

Diesel is also a downstream refined product of crude oil; the significant weakening of crude oil prices will reduce cost support for diesel, exerting a moderately bearish influence on spot diesel prices and pushing diesel prices lower in tandem.

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