Oil prices suddenly plunge, is the rebound over?

Recently, crude oil prices have rebounded from low levels. In a week or so, Brent crude oil prices have risen from around US$91/barrel to around US$102/barrel, an increase of more …

Recently, crude oil prices have rebounded from low levels. In a week or so, Brent crude oil prices have risen from around US$91/barrel to around US$102/barrel, an increase of more than US$10/barrel. On Thursday, domestic crude oil varieties led the rise in the commodity market, with crude oil rising by nearly 4%, low-sulfur fuel oil rising by more than 3%, asphalt rising by nearly 3%, and LPG rising by more than 2%.

After continuous rebounds, international oil prices fell back on Thursday and plunged. As of the close of the day, WTI crude oil futures prices fell by US$2.37/barrel, closing at US$92.52/barrel, a decrease of 2.50%; Brent crude oil futures October contract fell by US$1.88/barrel, closing at US$99.34/barrel, a decrease of 1.86 %.

Yang An, head of energy and chemical research at Haitong Futures, said that international oil prices began to rebound on Monday because the Saudi Energy Minister believes that oil futures are increasingly out of touch with fundamentals, which may force OPEC+ to take action and consider the option of reducing production.

Subsequently, oil prices spent most of this week on the OPEC production reduction discussion and the progress of the Iran nuclear agreement. However, in general, Saudi Arabia’s remarks played a very critical role and increased market optimism. On Wednesday, the United States responded by rejecting Iran’s additional After conditions, the Iran nuclear deal still needs to be negotiated, which also eases the pressure on the supply side. Coupled with the surge in European natural gas and the stimulation of US President Biden’s order to launch air strikes on Iran-related targets in Syria, oil prices rebounded from this Monday’s low.

Zheng Mengqi, energy and chemical researcher at Hizheng Futures, also said that the recent rise in crude oil prices is driven by multiple factors: First, with the early decline in crude oil prices, Saudi Arabia and some OPEC officials said that if necessary, production cuts can be achieved, and OPEC’s idle production capacity is relatively large. Low, mainly concentrated in Saudi Arabia and the United Arab Emirates, such as Angola, Nigeria and other countries, with limited capacity to increase production and cannot meet the target output stipulated in the existing agreement. If Saudi Arabia takes the initiative to reduce production, the contradiction between crude oil supply and demand will expand. Second, negotiations on the Iran nuclear deal have been blocked again recently. The United States has rejected all additional conditions proposed by Iran and urged Iran to lift any restrictions on international inspections. Due to the good progress in negotiations in the early stage, the negative sentiment caused by the sharp drop in oil prices has eased. Third, due to extended plant shutdowns in the United States and Norway, natural gas supply in Europe is tight, exacerbating price increases.

Gu Shuangfei, deputy manager of Nanhua Futures Consulting Services Department, said that the short-term market expects that the Iran nuclear agreement will be difficult to reach. At the same time, it is worried that OPEC will reduce production at its monthly meeting in September. This, coupled with the positive EIA inventory, has promoted a strong rebound in oil prices. WTI and Brent crude oil have been 3 consecutive times. daily rise.

“The current crude oil market is intertwined with bulls and bears. The bullish factors include the energy crisis and OPEC+’s reduction in production. The negative factors include the economic recession expectations brought about by the Federal Reserve’s sharp interest rate hikes and the decline in refinery processing demand during the traditional autumn maintenance period. Therefore, crude oil prices are still operating in oscillations. Mainly.” Zheng Mengqi said that the trend of crude oil in the internal market was stronger than that in the external market. Due to the conflict between Russia and Ukraine, the EU reduced its imports of Russian crude oil and increased its imports of Middle Eastern crude oil. Saudi Arabia increased its OSP for sales to Asia. Domestic imports of Middle Eastern crude oil decreased and Russian crude oil imports increased, but Russian crude oil cannot be used as a delivery product, and the number of crude oil warehouse receipts continues to drop to low levels. Coupled with high freight rates and divergent crude oil trends in the internal and external markets, the possibility of recovery in the short term is relatively low.

Gu Shuangfei said that the current market trading logic is a trade-off between low investment, low production capacity, low inventory in the global oil market and the risk premium brought about by Russia’s reduction in energy supply, and the slowdown in global economic growth. In the short term, the progress of Iran’s nuclear negotiations and whether OPEC will reduce production are the biggest factors affecting oil price fluctuations. “Judging from the current situation, both long and short drivers are strong. International crude oil is still in a wide fluctuation range in the short term. For SC crude oil, the price is still driven by strength, but the premium is already too high. It is recommended to wait and see for the time being. If the Middle East lowers Asian OSP prices in September and domestic imports increase, we can pay attention to the trading opportunities of long Brent crude oil and short SC crude oil.”

Yang An believes that the recent positive factors in the crude oil market have outweighed the negative impacts, which is the key reason why this round of rebound can proceed smoothly. Whether the rebound can be sustained depends on the subsequent progress of the Iran nuclear agreement and the impact of macro-level factors, including OPEC+’s production plan at the September meeting. At present, oil prices have rebounded significantly this week, but the monthly difference in the crude oil market has not strengthened significantly and is still at a low level. This shows that the overall supply and demand of the crude oil market is not very tight at present, and it is generally expected that there will be accumulated storage pressure in the second half of the year. On the demand side Before there is an effective improvement, it is still not appropriate to be too optimistic about the rebound space. Excluding some uncertain factors, based on the current supply and demand interpretation of the crude oil market and the global economic situation, there is still a high probability that oil prices will shift downward in the second half of the year. Therefore, this rebound has already increased by about US$10/barrel. It is not recommended to continue chasing the rise rashly, but you can pay attention to the price downward opportunities after the rebound.

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