On Wednesday (July 24), the price of oil ended its third consecutive trading day of decline due to the impact of a significant decrease in US crude and fuel inventories, and an increase in oil supply risks caused by major Canadian forest fires. However, due to concerns about weak global demand, oil prices remained near their lowest level in six weeks. WTI crude oil fell 7% in the previous three trading days, while Brent crude fell nearly 5%. #CrudeOilReview#
WTI September crude oil futures closed up 0.63 dollars/barrel, up about 0.82% to 77.59 US dollars/barrel. As of press time, it is now reported at 77.51 US dollars/barrel, up 0.71%.
(West Texas Intermediate (WTI) crude oil futures chart, source: FX168)
Brent crude oil futures in September closed up 0.70 dollars/barrel, up 0.9% at 81.71 US dollars/barrel. As of press time, it was now reported at 81.54 US dollars/barrel, up 0.65%.
(Brent crude oil futures chart, source: FX168)
[Market News Analysis]
The US Energy Information Administration stated that last week, US crude oil inventories decreased by 3.7 million barrels, while analysts surveyed by Reuters predicted a decrease of 1.6 million barrels.
US gasoline inventories decreased by 5.6 million barrels, while analysts predicted a decrease of 0.4 million barrels. EIA data shows that inventories of fractionated oils, including diesel and heating oil, decreased by 2.8 million barrels, while analysts predicted an increase of 0.25 million barrels.
Bob Yawger, energy futures manager at Ruisui in New York, said: "Demand is better than expected." "As long as gasoline performs well, it can support other markets in the short term. An increase in demand for fractionated oils is a boost."
The possibility of rate cuts by the US Fed in September has continued to increase, putting pressure on the US dollar. A weaker dollar may make oil cheaper for buyers using other currencies, which could increase demand for this commodity. In addition, lower interest rates may stimulate economic activity in the world's largest oil consuming country, the US, which could help support oil prices.
Investors are expected to closely monitor the release of US purchasing managers' index (PMI) data later in the North American trading session. In addition, investors will also focus on the release of domestic gross domestic product (GDP) annualized (Q2) data on Thursday. These reports are expected to provide new insights into the US economic situation.
However, the market remains cautious about global summer demand. Energy analysts have said that because weak driving season led to a decrease in refining margins, US refinery profits in the second quarter are expected to decrease significantly from the same period last year.
The ceasefire negotiations between Israel and Hamas, as well as the continuous concerns about the slowdown of the world's largest crude oil importing country's economy, may weaken global oil demand and put pressure on oil prices.
Government data shows that in June, the delivery of crude oil in India, the world's third largest oil importing and consuming country, also fell to the lowest level since February.
The increasing oil supply risk brought about by Canadian wildfires. Although wildfires have forced some producers to reduce production, these fires still threaten a large amount of supply and cause prices to rise. Bloomberg reported that the output of 0.388 million barrels/day of oil was within at least 10 hectares and 10 kilometers of wildfires. This month, wildfires provided some support for WCS-WTI spreads. Currently, the discount has narrowed from about $16.40/barrel to $14.70/barrel.
Imperial Oil Company (IMO.TO) stated that non-essential personnel at the Kearl oil sands production base have been reduced for safety reasons.
Meanwhile, the Russian Energy Ministry has promised to comply with the crude oil production quotas set by OPEC+ in July. The country's crude oil production exceeded its quotas in June.
The market expects that the signal of a downward trend will worsen in the next few trading days. Daniel Ghali, a senior commodity strategist at TDS, pointed out that this may trigger a large amount of buying of WTI and Brent crude oil in the next few trading days, because algorithms will be forced to re-accumulate recently cleared long positions. After all, our advanced positioning analysis has always emphasized that even in a flat tape, CTA may re-accumulate its length, which indicates that downward trend signals related to moving windows will naturally deteriorate. Prices need to maintain a downward trend to prevent algorithms from returning to the buying position, which creates conditions for short-term reversals in prices. At the same time, our real-time measure of the demand trend for commodities has finally deteriorated to the oversold level, which indicates that the reversal of demand sentiment may be somewhat overdone.