During the period from June 1st to June 4th, European and American crude oil futures prices rose sharply. Zhongyu Information monitoring data shows that the closing price of WTI crude oil futures on the New York Mercantile Exchange on June 4, 2020 was US$37.41/barrel, an increase of US$1.92/barrel, or 5.41%, compared with last Friday; intercontinental trading on June 4 The closing price of Brent crude oil futures was US$39.99/barrel, an increase of US$4.66/barrel, or 13.19%, compared with last Friday. In the four trading days from June 1 to June 4, the average closing price of WTI was US$36.74/barrel, an increase of US$2.647/barrel, or 7.77%, from last week. The average closing price of Brent was US$39.42/barrel, an increase of US$2.647/barrel from last week. It rose by US$4.006/barrel, or 11.31%. The four-day average price difference between Brent and WTI is US$2.680/barrel, which is US$1.36/barrel wider than last week.
Significant changes on the oil supply side continue to support the recovery of oil prices. OPEC+ has spared no effort to support oil prices, and record production cuts have gradually reversed the market mentality. The effectiveness of passive production cuts in North America has also been clearly seen. The latest data shows that U.S. crude oil production has declined. To 11.2 million barrels per day, this has dropped by about 15% from the high of 13.1 million barrels per day in March. The global economic restart wave has significantly improved the market’s psychological expectations for the future of fuel demand. The recent disclosure of a series of important economic data in Europe and the United States has also provided evidence that the world economy is moving away from the darkest stage. This has boosted the bullish mentality of crude oil. In the last cycle, the North American industry The positive data has given a more obvious boost to U.S. crude oil, and the Brent-WTI price gap once recorded a negative value.
Since early May, discussions initiated by Saudi Arabia and other countries to extend the scale of OPEC+’s current agreement on production cuts have continued to assist oil prices. Since the formal consultations on the extension of production cuts in late May, they have begun to form significant support for oil prices. , and the market continues to re-examine the recovery of North American oil demand. Although U.S. commercial crude oil inventories and Cushing inventories have continued to decline, the growing inventory of refined oil products has made the market doubt that U.S. fuel demand will recover slowly. North Sea Brent crude oil futures prices are relatively U.S. crude oil has become even stronger, with the Brent-WTI spread widening from multi-year lows this cycle.
In the second half of this cycle, major oil-producing countries represented by Saudi Arabia and Russia have basically finalized plans to extend production cuts. However, the low compliance rates of oil production reductions in countries such as Iraq and Nigeria have stalled negotiations. The continued rise in crude oil futures prices has created great resistance, with Brent being blocked below the critical level of $40.
Prediction: A key recent signal is that the contract spread of European and American crude oil futures has turned negative for the first time, which means that market operators have turned positive in their expectations for future oil prices. Although a formal meeting on the extension of the current scale of production cuts has not yet been held, and key details such as the length of production cuts have not yet been finalized, the extension of this round of production cuts has basically been confirmed, so it is expected that European and American crude oil futures prices will continue to rise. U.S. crude oil has previously stood above $35. In the short term, it is judged that Brent oil prices will rise above and stand above $40. At that time, we may be able to determine that crude oil has left the “ultra-low oil price” area. However, we still need to be wary of the rebound in crude oil prices, because the recovery on the demand side is actually not optimistic. It is judged that the upward momentum of U.S. crude oil will weaken significantly, and the Brent-WTI price gap will expand significantly in the next cycle. </p
