Positive macroeconomic data boosted oil prices, which basically returned to their highs on March 6. However, in the short term, against the background of the rebound of the epidemic in the United States, the uncertainty of the macroeconomic and refined oil demand prospects has hindered the rise of oil prices. If the epidemic situation in the United States does not improve significantly in the future, it will be difficult for crude oil to break through the current high range.
Crude oil prices oscillated higher last week, and the WTI first line contract price remained at 37.5 for the second consecutive week— In the range of US$41.5/barrel, the lower low has moved significantly higher than the first two weeks of June. Brent and SC crude oil prices also have similar characteristics. However, the rebound of the epidemic in some overseas regions has reignited market concerns about oil demand, resulting in oil prices not reaching new highs and increasing pressure for upward breakthroughs.
The non-farm payroll data in June was distorted
The U.S. Department of Labor last week It was announced on Thursday that non-agricultural employment increased by 4.8 million in June, and the unemployment rate fell by 2.2% to 11.1%. Although this report is generally positive, the survey of employment data was conducted in the week of June 12, when the epidemic rebounded on a large scale in many states in the southern United States in the middle and late half of the year. Two to three weeks after the investigation, newly confirmed cases were on the rise in only 40 states in the United States. As of June 30, at least 16 states in the United States had suspended or withdrawn their reopening plans, which undoubtedly gave hope to economic recovery. The outlook has been cast a shadow, with the intensification of the epidemic not fully reflected in the latest non-agricultural data.
In addition, many states in the United States canceled Independence Day celebrations due to the epidemic, but some areas still insisted on holding celebrations, and thousands of people gathered to celebrate. U.S. infectious disease experts pointed out that the celebrations may increase the infection rate among participants and overwhelm surrounding medical systems. Some local people take the warning that “gathering increases the probability of infection” lightly, and the consequences may be to slow down the local epidemic prevention and control and even the economic recovery process.
U.S. gasoline inventories are high
Weekly as of June 26 , U.S. gasoline inventories increased by 1.199 million barrels to 257 million barrels, close to the first quarter inventory high. According to seasonal characteristics, U.S. gasoline inventories usually begin the process of destocking in February and March. After 2-3 months, destocking becomes obvious during the peak demand season in summer, and inventories reach the low point of the year in the fourth quarter. However, due to the impact of the epidemic this year, the reduction in gasoline demand was greater than the reduction in supply, causing gasoline inventories to return to high levels during the year after experiencing a “V”-shaped rebound in March.
As of the week of June 26, the crack price difference between WTI and gasoline RBOB hit a new high in nearly one month, which increased the enthusiasm of refineries to produce gasoline, but the recovery of gasoline demand was not as fast as The increase in supply and the accumulation of gasoline stocks caused the center of gravity of price differences to fall last week. Overall, high inventories will put pressure on refined oil prices, thereby increasing the pressure for crack spreads to rise, which will be transmitted to refineries in the form of profit compression, which will dampen the enthusiasm for starting operations or drag down the speed of crude oil consumption and destocking.
Conclusion
In summary, the recent OPEC+ production cuts and the U.S. Crude oil production has stabilized to support oil prices, but the core momentum for upward breakthroughs mainly comes from the recovery of the demand side. It has been some time since many countries around the world have restarted their economies, and favorable macroeconomic data has boosted oil prices, which have basically returned to their highs on March 6. However, there are obvious resistances around US$42/barrel for WTI’s first line contract and around US$305/ton for SC’s main contract, because the recent uncertainty in the macroeconomic and refined oil demand prospects against the backdrop of the rebound of the US epidemic has blocked the upward movement of oil prices and increased pressure. . Therefore, we predict that if the epidemic situation in the United States does not improve significantly in the future, it will be difficult for crude oil to break through the current high range. </p
