FX168 Financial News (North America) — Oil prices rose slightly on Wednesday (May 8). Earlier, US oil storage data showed that crude oil inventories declined more than expected due to refineries increasing production before the summer driving season arrived. #原油收盘 #
WTI crude oil futures for June closed up 0.61 US dollars/barrel, or 0.78%, to close at 78.99 US dollars/barrel. As of press release, the current report is $79.18 per barrel, an increase of 1.02%.
(US West Texas Intermediate (WTI) crude oil futures chart, source: FX168)
Brent crude oil futures rose $0.42, or 0.5%, to close at $83.58 per barrel. As of press release, it is currently reported at $83.75 per barrel, an increase of 0.70%.
(Brent crude oil futures chart, source: FX168)
[Market News Analysis]
U.S. crude oil inventories fell by 1.4 million barrels to 459.5 million barrels last week, according to government data, while analysts predicted a decrease of 1.1 million barrels, and industry data showed an increase of 50.9 million barrels.
Matt Smith, chief petroleum analyst at Kpler, said: “Increased refining activity and exports contributed to a slight reduction in crude oil inventories, which helped ease last week's large inventories.”
However, according to a forecast report, the US Energy Information Administration expects global oil demand growth to slow this year. The US Energy Information Administration (EIA) released a report on Wednesday saying that the oil market is expected to maintain balance in 2024, indicating that non-OPEC countries will fill the gap in OPEC production cuts.
Bloomberg News reporters Will Hares and Salih Yilmaz said in a report on Wednesday that because of the recent drop in oil prices from $87.12 on April 5 to $77.01 on April 5, 2019, OPEC+ (Organization of Petroleum Exporting Countries and its allies) has sufficient reason to extend production cuts.
“Gasoline demand was still below 9 million barrels (per day) before the summer driving season began. This is a pretty serious situation,” said Mizuho Energy Director Bob Yawger.
Expectations of the Federal Reserve's interest rate cuts have been postponed over and over again. As investors bet that the US economy is performing better than other countries, the dollar strengthens, making it more expensive for investors holding other currencies, thereby curbing demand for oil and further limiting crude oil prices.
PVM Oil analyst John Evans said, “Removing the current geopolitical triggers, the market will face a sticky US inflation situation, and interest rates will not only keep the dollar high, but also make trading any kind of commodity more expensive.”
On the geopolitical side, oil prices have cooled further since the risk of an interruption in Middle East oil production did not occur. As traders seem tired of pricing risk premiums for things that haven't happened yet, this has led to some declines in oil prices.
In the recent trading day, hopes for a cease-fire in Gaza have put some downward pressure on oil prices, and some analysts say the risk premium for oil has also declined.
The US believes that the cease-fire negotiations in Gaza should narrow the differences between Israel and Hamas. US CIA Director William Burns traveled to Israel on Wednesday to meet Israeli Prime Minister Benjamin Netanyahu, Israeli officials said.
The EIA said that any sign of escalating geopolitical risks in the Middle East could lead to a sharp rise in oil prices. On the one hand, easing concerns about disruptions in oil supply may drag WTI prices lower. At the same time, the increase in US crude oil inventories has put some selling pressure on crude oil prices, as this is usually a sign of weak demand. Meanwhile, due to strong demand prospects this summer, Saudi Arabia raised the price of crude oil sold to Asia, Northern Europe, and the Mediterranean in June. As prospects for the Middle East conflict subside, Saudi Arabia's efforts to keep prices rising are consistent, according to Bloomberg.
Analysts at Morgan Stanley said the geopolitical risk of oil prices is dissipating as concerns about further escalation of the conflict subside.
Cautious expectations of OPEC and its allies (OPEC+) production cuts ahead of the June 1 policy meeting also put pressure on the market.
Russia relaxed its oil production cuts in April (below the promised level of production cuts), which raised oil production above the target level (as set out in the OPEC+ oil production reduction agreement). According to foreign media calculations based on official data, Russia cut crude oil production last month less than promised. Last month, the average daily production of Russian crude oil was slightly below 1.285,000 tons. According to the normal calculation of 7.33 barrels per ton, it is equivalent to 9.418 million barrels per day, a decrease of about 219,000 barrels from March, and about 319,000 barrels higher than the level stipulated in the agreement reached with OPEC. In April, Russia promised to reduce production by 350,000 barrels per day compared to the previous month. This is another move after announcing a reduction of 500,000 barrels per day in February 2023. Russia's production target for April is 9.09 million barrels per day.
Russian Deputy Prime Minister Alexander Novak said on Tuesday that OPEC+ has yet to discuss increasing oil production. Earlier, he issued a statement earlier in the day saying the group could choose to increase production.
Goldman Sachs anticipates that OPEC is likely to extend production cuts in June due to increased inventories. It is no longer expected that OPEC+ will announce the lifting of some voluntary production cuts in June. It is still expected that Brent crude oil will remain in the range of 75-90 US dollars/barrel in most cases. The average price of Brent crude oil is still predicted to be 82 US dollars/barrel in 2025.
[Focus on financial data and events on the next trading day (Beijing time)]
(1) 07:50 The Bank of Japan announces a summary of the opinions of the review committee members at the April meeting
(2) 10:00 China's trade balance for April
(3) 19:00 Bank of England announces interest rate decision and meeting minutes
(4) Bank of England Governor Bailey held a press conference at 19:30
(5) Number of jobless claims in the US at 20:30 to the beginning of the week of May 4
(6) EIA natural gas inventory for the week from 22:30 to May 3
(7) At 02:00 the next day, Federal Reserve Daly attended a fireside conversation