In July, international oil prices basically maintained a narrow range of fluctuations, and the overall fluctuations were relatively small. The amplitude for the entire month was less than 10%, which is extremely rare. On the one hand, the COVID-19 epidemic in the United States, Brazil, India and other countries has worsened significantly, making the market worried about the demand outlook. OPEC+ decided to reduce the scale of production cuts starting in August, putting pressure on oil prices; on the other hand, some economic data show that the global economy has passed The worst period has come to an end. The United States cut crude oil production by a record in May, and the U.S. dollar fell sharply to a new low in more than two years, providing support to oil prices.
In July, U.S. crude oil futures fluctuated in the 38.54-42.51 area, closing at 40.43 US dollars per barrel. The monthly increase was 1.53%; Brent crude oil fluctuated in the 41.03-44.89 area, closing at $43.71/barrel, and the monthly increase was about 5% last week. The cumulative fluctuation range of the two oils is less than 4 US dollars. Although the gains were modest, U.S. crude rose for a third straight month and Brent rose for a fourth straight month.
The global new crown epidemic worsens further , suppressing the outlook for crude oil demand
The development of the global new crown epidemic in August is worrying. The number of confirmed cases and deaths in the United States, Brazil, and India continues to increase, with new confirmed cases in a single day The number of people and the number of deaths in a single day has repeatedly set new records. Japan, Australia, South Korea and other countries have shown clear signs of a second round of COVID-19 epidemics, all suggesting that it will be difficult for the global economy to grow significantly in the coming period. Previous expectations for a rapid economic recovery have basically disappeared. . The demand outlook for crude oil has also deteriorated significantly, which has significantly weakened the upward momentum of oil prices.
(U.S. crude oil main contract monthly chart)
The COVID-19 epidemic data released by the World Health Organization on July 31 showed that the number of new cases worldwide in a single day exceeded 290,000, setting a new high. The WHO’s daily epidemic report shows that since July 20, the number of new cases worldwide every day has exceeded 200,000. As of 10:00 on July 31, Central European Time (16:00 Beijing time), the number of confirmed cases worldwide increased by 292,527 from the previous day, reaching 17,106,007; the number of deaths increased by 6,812, reaching 668,910.
The latest statistics on the COVID-19 epidemic released by Johns Hopkins University on the 31st show that the cumulative number of confirmed cases in the United States exceeds 4.5 million. Data show that as of 14:58 on July 31, Eastern Time (2:58 on August 1, Beijing time), there were a total of 4,536,240 confirmed cases and 152,878 deaths in the United States. On July 30, there were 1,468 new COVID-19 deaths in the United States, the highest single-day increase since May 27.
On July 31, there were 7,642 new cases of COVID-19 in California, bringing the total to 500,747, and 208 new deaths, bringing the total to 9,223. This is the highest number since the COVID-19 pandemic began. The highest number of deaths in a single day.
According to statistics from Japan Broadcasting Association TV Station, as of 21:00 on July 31 (20:00 Beijing time), Japan had 1,557 new confirmed cases of COVID-19, setting another new record for new cases in a single day. Count new highs. Japan has had more than 1,000 new confirmed cases for three consecutive days.
Data show that on July 31, the total number of confirmed cases in Japan reached 36,366; there were 3 new deaths, and the total number of deaths was 1,010. There were 463 new confirmed cases in Tokyo. The number of new cases in a single day exceeded 400 for the first time. It also set a record for the highest number of new cases in a single day. The total number of confirmed cases in Tokyo reached 12,691.
On July 31, the British government reported 846 new confirmed cases of COVID-19, the highest single-day increase since June 28.
The Philippine Department of Health reported 4,063 new cases of infection, the highest single-day increase in cases, and 40 new deaths.
On August 1, Poland reported 658 new confirmed cases of COVID-19, the highest single-day increase on record.
In addition, the U.S. economy suffered its worst contraction since the Great Depression in the second quarter, demonstrating the devastating impact of the coronavirus on the United States, the world’s largest oil consumer.
The U.S. gross domestic product (GDP) plunged 32.9% at an annual rate in the second quarter, the largest decline since the government began recording data in 1947. In addition, the number of people filing for unemployment benefits rose last week, indicating that the increasingly severe epidemic across the United States is having a further impact on the economy.
A Reuters survey of more than 500 analysts around the world showed that the global economic outlook has become increasingly bleak. COVID-19 infections are still rising and the risk of another lockdown raises the possibility of a reversal of the economic rebound. This is obviously not conducive to the recovery of crude oil demand and exerts a drag on oil prices.
Stephen Brennock of oil broker PVM said: “As long as the impact of the new coronavirus persists, the upside potential for oil prices will continue to be insufficient.”
ExxonMobil stated that oil consumption is not expected to recover until quite some time into 2021.
OPEC+ will reduce record production cuts, and OPEC crude oil production surges in July
As the global economy slowly recovers from the new coronavirus pandemic, allies such as the Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed on July 16 to reduce record production cuts from August, but they also said that there will be A second wave of virus infections could complicate the market’s return to balance.
OPEC��Crude Oil Monthly Chart)
Prospects: The contango in the oil market implies that supply is oversupply again, pay attention to OPEC trends
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In the past week, front-month September Brent crude oil futures have been trading at a discount of $2 per barrel to the March 2021 contract, which is the narrowest discount since May. The structure, known as contango, typically signals a surplus of prompt oil in hopes of a pickup in demand in the coming months.
For OPEC, this development is a headache. OPEC hopes demand will rebound quickly after a round of record production cuts around the world. OPEC will have to either consider further production cuts or tolerate a prolonged period of low oil prices.
Bjoernar Tonhaugen, head of oil market research at Rystad Energy, said: “OPEC’s attempts to increase production starting in August may backfire because we are still far from out of the woods in terms of oil demand. The market will fall back into a small oversupply, and I am afraid there will not be another supply shortage before December 2020.” Howie Lee, an analyst at Oversea-Chinese Banking Corporation in Singapore, said that the market is not Believing that demand is recovering, we instead choose to further buy forward contracts at ever-higher premiums. In April, front-month West Texas Intermediate (WTI) crude oil futures fell into negative values, causing serious injuries to some fund managers. After that, many exchange-traded funds (ETFs) also distributed their long positions more evenly among Each day contract.
ING’s Warren Patterson noted that U.S. producers are bringing their previously shut-in wells back into production… given the disappointing demand, this raises the possibility of another accumulation of inventories in the market. sex.
OPEC+ will hold the next JMMC meeting on August 18 to decide on further production reduction arrangements, and investors need to pay attention. In addition, investors also need to pay attention to changes in international tensions and the development of the global COVID-19 epidemic.
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