In the past week, international oil prices have mainly fluctuated. The U.S. Senate passed the 3.5 trillion dollar spending plan with a narrow advantage. The U.S. stock market has repeatedly set record highs, and crude oil inventories have fallen, providing support for oil prices. However, the rebound of the new crown epidemic has caused The IEA and other institutions lowered their expectations for crude oil demand growth, and the US drilling data continued to increase, which put pressure on oil prices. Relatively speaking, the downside risks faced by short-term oil prices have increased significantly.
U.S. crude oil dropped to 65.15 US dollars per barrel this week, the highest it rose to 69.62 US dollars per barrel, to close at 68.03 US dollars per barrel, a weekly increase of about 0.29%, given the rapid rebound of the epidemic, and the 70-round mark has significantly suppressed oil prices. , The market outlook oil prices may once again test the support near the July low of 65.01, and once the support falls below that support, it will increase the mid-line bearish signal.
Conversely, if the U.S. oil can break through the double resistance of the 20-day moving average and the 70 integer mark, it will increase the short-term bullish signal.
Brent crude oil hit a minimum of US$67.60/barrel this week, a maximum of US$71.90/barrel, and closed at US$70.25/barrel, a weekly decline of about 0.34%.
Three big bulls support oil prices
The U.S. Senate narrowly passed the $3.5 trillion spending plan
The U.S. Senate narrowly approved the $3.5 trillion spending plan early on Wednesday morning. The plan will be used for President Biden’s current top priority; lawmakers have previously debated whether large-scale spending is needed to address climate change and poverty. After months of bargaining, the two parties in the Senate voted 69 to 30 on Tuesday to pass the $1 trillion infrastructure bill, which will make the largest investment in roads, bridges, airports and waterways in decades. However, the future of this measure in the House of Representatives is still unclear.
This may be the largest investment in roads, bridges, airports, and waterways in the United States in decades. Analysts said that if the bill is implemented, it will boost the economy and demand for petroleum products.
(U.S. crude oil daily chart)
S&P 500 and Dow hit new highs
The Dow Jones Industrial Average and the S&P 500 Index rose slightly on Friday (August 13), breaking a record closing high, and recorded a second consecutive week of gains, boosted by the rise in Disney’s stock price, but the sharp drop in the consumer confidence index suppressed Increase.
This week, the Dow rose 0.87%, the S&P 500 index rose 0.71%, and the S&P 500 index set a record high for four consecutive trading days.
The U.S. stock market has been steadily and steadily in the past few trading days, setting new highs repeatedly. The strong earnings season, the passage of large-scale infrastructure bills, and data showing that inflation may rise at a slower rate than expected have boosted investors’ confidence in the economic recovery.
EIA crude oil inventories fell, gasoline inventories fell to a nine-month low
The U.S. Energy Information Administration (EIA) said on Wednesday that crude oil inventories fell slightly last week and gasoline inventories fell to the lowest level since November last year. Due to increased demand, overall crude oil inventories have been declining for several weeks.
As of the week of August 6, crude oil inventories fell by 447,000 barrels to 438.8 million barrels. Analysts estimated a decrease of 1.3 million barrels. Due to increased demand, overall crude oil inventories have been declining for several weeks. Fuel consumption measured by refined oil supply has declined in the past week, led by gasoline and aviation fuel supplies.
U.S. gasoline inventories fell by 1.4 million barrels to 227.5 million barrels, an estimated decrease of 1.7 million barrels.
The U.S. Energy Information Administration (EIA) stated in a monthly forecast that, so far, U.S. job growth and increased liquidity have boosted gasoline consumption in 2021.
Phil Flynn, senior analyst at Price Futures Group, said that the US government added that it did not call on US producers to increase production, which also provided support for oil prices.
Four major bears are overwhelming, beware of short-term downside risks
The epidemic rebounded rapidly, suppressing demand prospects
Due to the delta variant virus raging, the number of new cases and hospitalizations in the United States reached the highest level in six months. The impact of Delta in the United States has exacerbated concerns about the rise in the number of new cases across Asia. This puts oil prices facing greater downside risks in the short term.
Japanese media said that the Japanese epidemic has fully entered the “fifth wave.” Tokyo Governor Yuriko Koike warned on Friday (August 13) that the epidemic situation in Tokyo was at a catastrophic level. The number of new infections in the area rose to a record 5,773, which more than tripled in just three weeks.
According to British Sky News on August 12, local time, British infectious disease scientist Stephen Riley told local media that the British epidemic is likely to intensify after the fall. Professor Riley explained that the number of newly diagnosed new coronary pneumonia cases in the UK in a single day exceeded 50,000 in mid-July, and is currently stable at around 20,000. This is because students are on vacation, many adults work from home, and most of their social activities are outdoors. But starting in September, the situation may change.
Researchers from the Indian Institute of Technology predicted based on mathematical models that the third wave of the new crown epidemic in India may arrive in August and reach its peak in October. In India, the painful memories of the second wave of the epidemic gradually dissipated, shopping malls were crowded, and tourists in the scenic spots followed one after another. Indian media described it as if people have found the feeling before the epidemic.
According to the latest statistics from the New York Times, there were 186,840 new confirmed cases of new crown and 1,089 new deaths on the 13th, local time in the United States. As of the 12th, the average number of new cases in a single day in the United States in a week exceeded 120,000, reaching 128,537; the average number of deaths in a single day reached 651.
Jay Hatfield, portfolio manager of the InfraCap MLP listed exchange fund, said, “The news surrounding Delta is worse than we expected. With the increase in cases, the short-term outlook becomes more and more worrying.” “Long-term indicators are still relatively bullish. Oil, but in the short term, the delta variant and its impact on demand will not fade anytime soon”
JPM Commodities Research said, “We now expect the recovery of global demand to stagnate this month. Oil demand in August reached only 98.3 million barrels per day, and the average in September was 97.9 million barrels per day, which was the same as the July average of 98 million barrels per day. The day is flat.”
(Brent crude oil daily chart)
IEA sharply lowered its oil demand forecasts and expects to reemerge oversupply in 2022
Due to the resurgence of the epidemic to impact the demand of major oil-consuming countries, the International Energy Agency (IEA) this week “significantly” lowered its global oil demand forecast for the rest of this year, and expects that there will be an oversupply situation in 2022.
The IEA said that last month’s global oil demand had a “sharp turnaround”, which fell slightly after a surge of 3.8 million barrels per day in June. The agency lowered its demand forecast for the second half of this year by 550,000 barrels per day.
However, the agency expects that as the global economic recovery accelerates, global crude oil demand will continue to rise, reaching an average of 98.9 million barrels per day in the fourth quarter of this year.
OPEC lowered its expectations for the organization’s crude oil demand, saying that the market outlook is “unpredictable”
The Organization of the Petroleum Exporting Countries (OPEC) also issued a monthly report this week, saying that as its ally Russia’s output is about to strengthen, it will lower its forecast for the organization’s crude oil demand by 1.1 million barrels per day in 2022.
The revised outlook shows that OPEC will have oversupply to the global oil market in the first half of 2022, especially if the planned increase in production is implemented.
As the outlook is “unpredictable”, it will be particularly important for OPEC and its allies to stay vigilant and act resolutely to maintain a stable and balanced market.
Goldman Sachs cuts supply gap expectations
Similarly, Goldman Sachs has reduced its short-term global oil gap forecast from 2.3 million barrels per day to 1 million barrels per day, as demand will fall in August and September. Leaving aside the unfavorable factors of the Delta virus, Goldman Sachs still expects that the recovery in demand will continue as the vaccination rate rises.
However, Goldman Sachs still believes that the forecast of Brent oil price at $80 per barrel at the end of the year remains unchanged.It is expected that OPEC+ idle capacity will be fully normalized in the spring of 2022
In addition, it should be noted that the data of energy service company Baker Hughes shows that the number of active oil rigs in the United States increased by 10 this week to 397, which is the most since April 2020. This implies that U.S. crude oil production is gradually picking up. Oil prices are also unfavorable.
Outlook
In the coming week, investors need to pay attention to the performance of a series of economic data. Among them, China will announce July industrial added value, consumer goods retail data and LPR interest rate data, the UK and Australia will announce employment data, and the United States will release 7 Monthly industrial output data and retail sales data known as “terrorist data”.
In addition, investors need to pay close attention to the rebound of the new crown epidemic in European and American countries.