This week (November 18-22), oil prices first fell and then rose. Earlier, the market’s expectations for increased inventories and weak demand increased, and sources said that Russia is unlikely to participate in the OPEC+ meeting. Agreeing to intensify production cuts, U.S. crude oil hit a new low of more than two weeks at $54.85 per barrel; however, with Cushing crude oil inventories falling sharply and positive signals from the international trade situation, oil prices turned from falling to rising. Oil once hit an eight-week high of $58.74 per barrel; however, it finally closed at $57.93 per barrel, the same as last week’s closing price.
Cushing crude oil inventories drop
API crude oil inventories released this week increased significantly 6 million barrels, which once significantly suppressed oil prices. Oil prices fell nearly 3% on Tuesday. However, the increase in EIA crude oil inventories released on the official website was much lower than the increase in API crude oil inventories. At the same time, Cushing crude oil inventories fell by 2.295 million barrels, which provided a better environment for oil prices. of support.
Specific data from the U.S. Energy Information Administration (EIA) on Wednesday (November 20) showed that U.S. crude oil inventories increased by 1.4 million barrels, lower than the 1.5 million barrel increase expected by analysts polled by Reuters, and the American Petroleum Institute (API) The inventory increase announced on Tuesday night local time was 6 million barrels. Bob Yawger, director of Mizuho Futures, pointed out that the amount (the EIA inventory increase) was not as large as the API report. Secondly, Cushing inventory fell sharply, which was the New York Mercantile Exchange. delivery location, so its (positive) impact is too great. ”
(Daily chart of main US crude oil contract)
OPEC may extend production cuts Deadline
Russia stated that it will continue to cooperate with the Petroleum Exporting Countries (OPEC) to maintain the balance of the global oil market; in addition, sources said that OPEC+ will extend the production cut deadline in December, which will also provide support for oil prices .
OPEC will meet in Vienna on December 5, followed by talks with a number of other exporters, including Russia, known as OPEC+. There were reports on Thursday that OPEC and its allies may limit oil prices. Production will be extended until mid-2020, and the current oil supply reduction agreement will last until March 2020.
According to OPEC sources, in order to support oil prices, OPEC and its allies may impose oil production restrictions when they meet next month Extended to June next year. Sources said that a formal announcement of deeper production cuts seems unlikely at this time, although a message about better compliance with existing production reduction plans may be sent to the market.
Andrew, President of Lipow Oil Associates Lipow said that the market has basically accepted the fact that economic growth is slowing down, the pace of crude oil demand growth is also slowing down, and crude oil demand growth forecasts have been lowered… This kind of bad news has been largely ignored. Being digested by the market, the upcoming OPEC policy meeting and the unrest in Iran and Iraq are becoming the focus of attention.
Lipow also pointed out that the market is well supplied, which may force OPEC and non-OPEC oil-producing countries to extend production restrictions The agreement will be implemented until 2020.
(Daily chart of Brent crude oil main contract)
International There are positive signals from the trade situation, turmoil in Iran and Iraq, and optimistic PMI data in Europe and the United States
The international trade situation has been going back and forth this week, and in the end, positive remarks about the Sino-US trade agreement have prevailed. It also provided support for the oil market; although investors still have a certain wait-and-see mood.
According to Xinhua News Agency, Ministry of Commerce spokesperson Gao Feng said at a regular press conference of the Ministry of Commerce on November 21 that the economic and trade teams of China and the United States will continue to maintain close communication. Regarding the details of the agreement negotiations, no more information can be disclosed at present, but the rumors from the outside are inaccurate. China is willing to work with the United States on the basis of equality and mutual respect to properly resolve each other’s core concerns and strive to reach a first-phase agreement. This is in the common interests of China and the United States, as well as the interests of the entire world.
Escalating tensions over Iran also supported oil prices. On November 15, riots broke out in Iran after the government announced that gasoline prices would increase by at least 50%. The riots quickly escalated to the political level, with protesters demanding that senior officials step down.
In Iraq, security forces fired live ammunition and tear gas at demonstrators in Baghdad on Thursday, killing seven people, security and medical sources said. It was the latest deadly violence as authorities try to suppress anti-government protests.
The unrest in Iran and Iraq has made investors worried that crude oil supply may be affected, which is good for oil prices; on the demand side, in addition to the United Kingdom, the overall performance of PMI data in European and American countries in October was better than expected and the previous value, which also improved the outlook for crude oil demand , which also provides support for oil prices.
Forecast: The next week will usher in the Thanksgiving Day in the United States. Before Thanksgiving, there are still important data such as U.S. PCE data in October, U.S. monthly durable goods orders in October, and U.S. third-quarter GDP revisions. Investors need to pay close attention; in addition, investors need to pay close attention to the international trade situation.
�From a technical perspective, U.S. oil is still mainly suppressed by the 61.8% retracement of the 63.38-50.99 decline near 58.64. If it can break through this resistance, it is expected to open up new room for growth. Below, pay attention to the support near the 20-day moving average of 56.63. If it falls back below this position, it will weaken the bullish signal in the market outlook. </p
