This week (8.8-8.16), crude oil as a whole showed a trend of rising and then falling. WTI averaged $77.68 per barrel this week, up $3.44 per barrel, or 4.64% from the previous week. During the week, oil prices were mainly supported by factors such as investors' concerns about the geographical situation in the Middle East and the decline in crude oil supply from Russia and Libya. The main factors that put pressure on oil prices are: the IEA and OPEC lowered expectations for oil demand growth and increased US crude oil inventories.

This week (8.8-8.14), crude oil as a whole showed a trend of rising and then falling, with the average weekly price rising month-on-month.

During the week, multiple favorable factors in market news boosted the rise in oil prices. In terms of the geographical situation, investors' concerns about the geographical situation in the Middle East are heating up, boosting oil prices. A senior Iranian military official said Iran's severe retaliation against the Israeli regime's assassination of Hania is rapidly unfolding. The US side said that the US is ready to deal with a major attack that Iran or its Middle Eastern proxies may launch this week. According to the Israeli side, the Israeli military is closely monitoring regional developments, particularly the movements of Hezbollah and Iran in Lebanon. Furthermore, on the supply side, Russia's promise to continue to cut crude oil production is also beneficial to oil prices. The Russian Ministry of Energy said that Russia's oil production declined in July but still exceeded OPEC+ production quotas, promised to abide by OPEC+ quotas and make compensation for excess production. Earlier, people familiar with the Russian Ministry of Energy said that Russia's crude oil production in July was 9.045 million barrels per day, a decrease of 3.3 barrels per day from June, but it is still about 0.067 million barrels higher than Russia's daily production quota under the OPEC+ agreement.

However, on the other hand, the IEA and OPEC lowered the oil demand growth forecast, which dragged down the trend of oil prices. The IEA kept the forecast for global oil demand growth of 0.97 million b/d unchanged in 2024, but lowered the 2025 oil demand growth forecast by 0.03 million b/d to 0.95 million b/d. OPEC lowered the 2024 oil demand growth forecast by 0.14 million b/d to 2.11 million b/d, and lowered the 2025 oil demand growth forecast by 0.07 million b/d to 1.78 million b/d. In addition, the increase in US crude oil inventories also caused international oil prices to fall under pressure. According to data from the US Energy Information Administration, total US crude oil inventories, including strategic reserves, increased 2.051 million barrels to 0.807205 billion barrels from a week ago, and US commercial crude oil inventories increased 1.357 million barrels to 0.430678 billion barrels from a week ago.

This week, the average international crude oil spot price rose month-on-month. In terms of the Middle East crude oil market, market transactions are fair. Market merchants pay attention to the official sales price of Middle East crude oil, the latest crude oil tender activity, and OPEC+ supply trends. Saudi crude oil exports to China in September fell to about 43 million barrels from about 46 million barrels after the August revision, according to several trade sources. Saudi Arabia is China's second-largest supplier of crude oil. China is the world's largest importer of oil and the biggest contributor to global demand growth. Previously, Saudi Aramco adjusted the official sales price of its light crude oil in the Asian market, while keeping the official price of medium and heavy crude oil unchanged. Although the increase in official prices was less than expected, some buyers said that Saudi contract supply is still more expensive than other Middle Eastern crude oil sold in the spot market. Kuwait has kept the official price of crude oil exported from Kuwait, which was sold to Asia in September at a level of 1.25 US dollars per barrel rising to the average price of Oman/Dubai. Kuwait cut the official sales price of Kuwaiti ultra-light crude oil sold to Asia in September by 0.1 US dollars per barrel to an average price increase of 1.25 US dollars per barrel for Oman/Dubai. In addition, Qatar Energy issued tenders to sell two ships carrying El Shaheen crude oil on October 1-2 and October 26-27, and one ship each for Qatar Marine and Qatar terrestrial crude oil. The tenders will close on August 14, and the bid will be valid until August 15. In the Asia-Pacific crude oil market, Australia's Santos is considering selling Cooper Basin shipments. Currently, Santos holds a 0.575 million barrel Cooper Basin shipment from October 8-14.

This week, on the supply side, OPEC+ held a market monitoring meeting on August 1 and kept the crude oil production policy unchanged. Damo anticipates that global crude oil may be overresourced by 2025. The tight oil supply situation will continue for most of the third quarter of this year, but by the fourth quarter, when seasonal oil demand weakens and oil supply from OPEC and non-OPEC oil producers both resume growth, the supply balance will be restored.

On the demand side, the market is still wary of global summer demand. Due to poor demand during the peak summer driving season, US refiners' profits in the second quarter are expected to be significantly lower than the same period last year. The cease-fire negotiations between Israel and Hamas, and ongoing concerns that slowing demand from China, the world's largest importer of crude oil, will weaken global oil demand, have put pressure on the oil market. Crude oil deliveries to India, the world's third-largest oil importer and consumer, also fell to their lowest level since February, according to government data.

The operating rate of US refineries increased, but commercial crude oil reserves increased after six consecutive weeks of decline, and gasoline inventories and distillate stocks declined. According to data from the US Energy Information Administration, as of August 9, 2024, crude oil inventories were 2.04% lower than the same period last year; 5% lower than the same period of the past five years; gasoline inventories were 2.8% higher than the same period last year; 3% lower than the same period of the past five years; distillate stocks were 8.97% higher than the same period last year, and 7% lower than the same period of the past five years. Furthermore, US crude oil imports averaged 6.285 million barrels per day last week, an increase of 0.061 million barrels over the previous week, and the average daily import volume of refined oil products was 134 barrels, a decrease of 0.764 million barrels from the previous week.

The net long positions held by speculators in light crude oil futures on the New York Mercantile Exchange decreased by 9.4%. According to the latest statistics from the US Commodity Futures Management Commission, the total holdings and short positions of WTI crude oil futures rebounded for the week ending August 6, and long positions and net positions continued to decline. Among them, total holdings rose 2.3% month-on-month, long positions fell 3.1% month-on-month, short positions rose 18.9% month-on-month, and net long positions fell 9.4% month-on-month. Due to an increase in short positions and a decrease in long positions, WTI's long to short ratio continued to decline to 3.67, down 0.84 or -18.55% from the previous month.

In the same week, the geopolitical situation in the Middle East tightened again, and Iran may carry out a retaliatory attack on Israel. Affected by this, capital began to return to the crude oil futures market. Judging from the financial situation in the market, although Iraq and Israel are quite tough, short positions have increased dramatically since there have been no substantial retaliation actions, and global stock markets have been sold off, and market fears that the global economy may be on the verge of recession, while long positions have continued to decline for three weeks. Judging from the performance of oil prices, WTI crude oil futures prices have declined further due to the strength of short positions. Looking at the future market, geopolitical turmoil may support the oil market to a certain extent, yet concerns from the economy remain unabated, so crude oil prices may fluctuate.

On the technical chart, WTI crude oil futures prices rose and then declined during the week. The main factors that boosted oil prices this week: first, the tension between Iraq and Israel threatened Middle Eastern crude oil exports; second, concerns about the economic recession have eased; and third, the US plans to buy back more oil in the few months beginning in 2025. The main factors suppressing oil prices this week: first, an unexpected increase in US EIA crude oil inventories; second, the cease-fire negotiations in Gaza will resume; third, OPEC and IEA monthly reports lowered global oil demand forecasts; and fourth, a slowdown in global aviation fuel consumption. As of the 14th, WTI closed at $76.98 per barrel, up 1.75 US dollars/barrel, or 2.33%; for the week ending the 14th, WTI's average weekly price was $77.68 per barrel, up 3.44 US dollars/barrel, or 4.64%. Judging from the technical pattern, the bearish trend in oil prices is shrinking.

On the economic side, during the week, the US Federal Reserve's July 31 meeting decided to keep the benchmark interest rate unchanged in the 5.25%-5.50% range for the eighth time in a row, but the path to cutting interest rates gradually became clear. Federal Reserve Chairman Powell said that the Federal Reserve's employment and inflation risks have entered a better balance. The second-quarter inflation data has increased the Fed's confidence, and there is no need to pay 100% attention to inflation. If the labor market deteriorates or inflation falls rapidly, the Federal Reserve is ready to respond, and the September interest rate cut “may be on the agenda.”

This week, data showed that India currently imports 40% of its total crude oil imports from Russia. The average daily import volume so far this year has reached 1.6 million barrels, a sharp increase of 1000% over 2021. This leap forward began in 2022. After the Russian-Ukrainian war broke out, Western countries imposed severe economic sanctions on Russia. While India received Russian oil, crude oil imports from Persian Gulf countries fell sharply from nearly 70% to 45%.

Russia's oil production in July exceeded the production quota agreed with OPEC oil producers, but promised to abide by the quota and make up for the excess production. According to the Russian Ministry of Energy, the country's oil production in July fell compared to June, but it exceeded the production target by 0.067 million b/d due to problems with the one-time supply plan. The Russian Ministry of Energy said that production levels in August and September should be compensated for this.

Shipment tracking data shows that in the four weeks ending August 11, Russian shipping crude oil exports increased by an average of 0.08 million b/d, rebounding from the low level set two weeks ago. The data shows that in the four weeks ending August 11, the four-week average export volume of Russian oil terminals jumped to a five-week high of 3.19 million b/d.

The US is slowly replenishing its strategic oil reserves and plans to buy back more oil in the months beginning in 2025, after the US made the largest sale in history from strategic oil reserves in 2022. The goal of the United States is to buy 2 million barrels of domestic high-sulphur crude oil every month from January to March 2025. This crude oil will be stored at the Brian Hill oil storage depot in Texas. The oil storage depot has four storage sites, one of which recently completed maintenance work.

Jinlianchuang expects the crude oil market to bottom out in stages next week (8.15-8.21), supported by geopolitical risks in the Middle East, but major international energy agencies have lowered their global crude oil demand expectations one after another, putting pressure on the oil market. The market will continue to evaluate the fundamental environment of crude oil. Currently, the negative outlook is still dominant, but after a period of decline, traders may adjust their crude oil futures positions and wait and see further. Overall, international oil prices may continue to fluctuate next week.

However, for market institutions or investors, they can focus on crude oil futures to participate in the crude oil market. Assuming that a futures agency currently wants to adopt an inter-term arbitrage plan for market trading, then the institution can formulate a trading strategy for the current market situation. Currently, crude oil prices are fluctuating in a range. Price spread arbitrage can effectively hedge against the risk of one-sided transactions. Judging from the cross-period arbitrage method, if the monthly difference structure shows that the near-term spread of WTI crude oil futures has further widened, and the market mentality has improved recently, then investors can do so by buying recent contracts and selling forward contracts Hurry, if the near and far price spread of crude oil futures continues to widen, then this interperiod arbitrage transaction can still maintain profits.

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