Both API and EIA crude oil inventories unexpectedly fell sharply last week. A few months after the outbreak of the new crown pneumonia, there were signs that fuel demand had improved, encouraging traders. Oil prices closed up slightly on Wednesday (July 29) : US WTI crude oil September futures closed up 23 cents to 41.27 US dollars/barrel, or 0.6%; Brent crude oil September futures rose 53 cents, or 1.2%, to 43.41 US dollars/barrel.
Fundamental positive factors:
On Wednesday night, Beijing time, data released by the U.S. Energy Information Administration (EIA) showed that as of the week of July 24, EIA crude oil inventories decreased by 106.1 million barrels, which is expected to decrease by 171,000 barrels, and the previous value increased by 4.892 million barrels; the actual refined oil inventory Announced an increase of 503 million barrels, which is expected to increase by 534,000 barrels. The previous value increased by 1.074 million barrels.
On Wednesday, Beijing time, data released by the American Petroleum Institute (API) showed that as of the week of July 24, API crude oil inventories dropped by 6.829 million barrels to 531 million barrels, after an unexpected increase of 7.544 million barrels in the previous week; Weekly crude oil imports fell by 1.3 million barrels per day.
Although API data shows that US crude oil inventories have fallen more than market expectations, given that last week’s data recorded an unexpectedly large increase and gasoline consumer demand is doubtful, market sentiment is mixed. Tyche Capital analysts believe that the current demand for crude oil, whether it is driving or the aviation industry, has significantly weakened.
The Republicans in the U.S. Senate announced a new $1 trillion COVID-19 aid package proposal on Monday afternoon. In addition to setting the federal unemployment insurance benefits at 70% of workers’ previous wages to replace the $600/week unemployment benefits that stopped this week, the proposal will allow small businesses whose incomes have fallen by more than 50% to apply for the second wage protection program. Loans provide 105 billion U.S. dollars to help schools reopen in the fall, including 16 billion U.S. dollars to help states improve detection capabilities for the new crown virus.
TD Securities pointed out that in view of the fact that U.S. production has not yet seen a further decline, the U.S. demand growth rate may improve in the next few weeks, and the U.S. government has begun to seriously encourage the use of masks and other measures to limit the spread of the new crown virus, and oil prices are expected to gradually rise. Back to the top of the trading range, it is expected to trade in the range of US$38 to US$42 in the short term, and then further rise to US$44.
Fundamental negative factors:
On Wednesday night Beijing time, data released by the U.S. Energy Information Administration (EIA) showed that as of the week of July 24, EIA gasoline inventories increased by 654 million barrels, which is expected to decrease by 1.196 million barrels, and the previous value decreased by 1.802 million barrels.
On Wednesday, Beijing time, data released by the American Petroleum Institute (API) showed that as of the week of July 24, Cushing crude oil inventories increased by 1.144 million barrels, higher than the previous value by 716,000 barrels; refined oil inventories increased by 187,000 barrels, a high The previously expected decrease of 333,000 barrels and the previous value of 1.357 million barrels; gasoline inventories increased by 1.083 million barrels, much higher than the previous expected decrease of 967,000 barrels and 2.019 million barrels. After the release of the API data, the US and Burundi oil companies fell slightly in the short term.
Data released by FlightRadar on Monday showed that the fuel demand for commercial aviation has also declined in the past two weeks, and has been rising since the end of April. Last week, many American airlines, including Southwest Airlines and American Airlines, reduced their flight plans to increase the capacity of their autumn flights. The US government’s decision to impose quarantine restrictions on passengers returning from Spain is bound to destroy flights that could only be partially restored.
In addition, JPMorgan Chase analysts predict that U.S. oil production will increase slightly in the near future, if it may be short-lived, this expectation has also been confirmed by data released by US oil service company Baker Hughes on Friday. The data shows that the total number of oil rigs has increased for the first time since March, but the total number of rigs is still down by nearly 80% from the peak two years ago.
For many countries and regions around the world, the second wave of the new crown pneumonia epidemic has changed from a threat to a reality. The European Union, Japan, the United States and some other countries and regions have admitted that they have encountered a new epidemic. The governments of these countries have restarted quarantine measures, evacuated people from affected areas and conducted virus tests. Experts believe that the new wave of outbreaks has wiped out the prospects for a rapid recovery of the world economy. This means that world energy demand will continue to decrease, and oil prices will continue to fall in the future.