SMM: us crude oil fell slightly on Monday, falling 0.84 per cent to $40.21.
Us crude fell as low as $38.54 on Friday as IEA warned that a second spread of the epidemic would hurt demand, but reversed the weekly closing trend because RedSivir could reduce the risk of death, rising with US stocks, reaching as high as $40.77. At the same time, the number of US crude oil drilling has hit a record low for 10 consecutive weeks, and there are reports that Iraq is getting closer to reaching its production reduction target, which also supports oil prices.
But overall, the secondary spread of the epidemic overlaps the stagnant economic recovery, leaving the outlook for crude oil demand still uncertain. Unless there are more rigorous experimental results of the vaccine, the rebound in oil prices will be temporary. The market will react to the epidemic and the performance of economic data.
At the same time, OPEC+ will hold a joint ministerial meeting on July 15, but on the eve of the meeting, Geneva crude fell slightly as the market bet that OPEC+ would not extend the current production cuts by 2 million b / d from August, which partly dampened the market's optimism as the second spread of the epidemic hit demand.
In addition, data show that US crude oil funds have seen net outflows for three consecutive days, and CFTC position data show that investors are reducing their positions in crude oil, which also puts pressure on oil prices.
Therefore, the short-term market will pay attention to the joint ministerial meeting of OPEC+, before which the OPEC+ monthly report is also worth paying attention to, and investors can pay attention to the implementation rate of OPEC production reduction. As the market digests the scale of OPEC+ reduction, the production reduction in substandard oil-producing countries and the impact of the epidemic on the economy will become the key factors that dominate the oil market.
The number of US crude oil drilling has set a record low for 10 consecutive weeks.
The number of US oil and gas rigs fell by five to an all-time low of 258 in the week of July 10, according to Baker Hughes, suggesting there is still room for US crude oil production to continue to fall. This is 700 fewer than the same period last year, a drop of as much as 73%.
The total number of oil wells in the United States in the week of July 10 will be further to 181, although 177 wells are worse than expected, but fell to an all-time low for 10 consecutive weeks, and this is also the 18th consecutive week of decline in the number of US crude oil drilling.
More than half of U. S. crude oil drilling is located in Permian basins in West Texas and eastern New Mexico, but the number of crude oil drilling in this area is also expected to be at an all-time low.
The US Energy Information Administration (EIA) forecasts that US crude oil production will fall to 11.6 million b / d this year from a record 12.2 million b / d in 2019, while global oil and other liquid fuel consumption will fall to 92.9 million b / d by 2020. It was a record 101 million barrels per day in 2019.
So the continued decline in US crude oil drilling for a short period of time has helped to support oil prices.
Although US oil prices have fallen by about 34 per cent since the start of the year due to the destruction of the epidemic, US crude oil futures have risen 113 per cent in the past three months on market expectations of a global economic recovery and the government's gradual lifting of the blockade.
Analysts say higher oil prices will encourage energy companies to slow the decline in the number of drilling rigs and may start adding some units later this year.
The optimistic news of the vaccine has caused US oil to rebound more than $2 from its low, and we need to continue to pay attention to the progress of the epidemic and the performance of economic data
U. S. crude oil rose on Friday, boosted by Redsevir's ability to reduce the risk of death, which allowed the market to absorb some of the surge in U. S. cases.
Gilead Science said on Friday that an analysis showed that its antiviral drug redaciclovir helped reduce the risk of death in critically ill patients.
Redsevir is at the forefront of the global fight against new crown virus disease after another US government trial in April showed that RedSivir could help shorten the time it takes to recover from hospitalization. According to Gilead, the analysis showed that by the 14th day, 74.4% of patients treated with Redcivir recovered, compared with 59.0% of patients using traditional standard therapy.
Given that the biggest uncertainty in the current global economic recovery lies in the progress of the epidemic, news related to Redsevir boosted market optimism, so US crude oil rose more than 2.5% on Friday, reversing the weekly decline of US crude oil.
But there has been a steady stream of news of R & D progress since April, and the rebound in oil prices is expected to be short-lived until more rigorous experimental results are released.
According to Worldometer real-time statistics, there are more than 13 million confirmed cases of new crown pneumonia worldwide, reaching 13016744 cases, and a total of 570890 deaths worldwide.
As confirmed cases and hospitalizations continue to increase, restart programs have been suspended in many states in the United States. Some public health experts warn that if the current situation continues, the United States will enter "one of the most unstable periods in history". Data on Friday showed that the US producer price index fell unexpectedly in June, dragged down by falling food costs. According to a Bloomberg survey, the US economy is expected to contract by 32.6% in the second quarter.
Analysts pointed out that economic indicators show that the pace of recovery from the recession in the United States is slowing, only two months after the economic rebound shows signs of weakness. Therefore, the market needs to continue to pay attention to the progress of the epidemic and the performance of economic data.
This week looks at June US CPI data released on Tuesday, US industrial production data for June on Wednesday, and US retail sales data for June on Thursday. At the same time, it is necessary to usher in the earnings season in the United States this week, which may present a bleak picture of the economy.
"although global stock markets completely ignored the deterioration of the global economic situation in the last quarter, the results of the second quarter are bound to reveal a greater impact of the epidemic when the US earnings season begins," said analysts at Capital Macro. Compared with the previous quarter, this may be one of the worst earnings seasons on Wall Street. It remains to be seen whether market participants have the appetite to digest these desperate numbers. "
Libyan oil exports have been suspended again
On the evening of the 12th local time, the Libyan National Oil Company issued a statement saying that Libyan oil exports had to be suspended again due to force majeure.
Libyan oil exports were suspended because the armed forces belonging to the Libyan National Army once again blocked the oil fields, the statement said.
On the 10th, Libya's oil exports resumed after being suspended for six months due to a blockade, but only the other day, the armed forces belonging to the Libyan National Army again blocked the Shalala oil field in Libya's largest oil field and the largest oil port in Sidra on the 11th. The Libyan National Oil Company publicly condemned the act in a statement, saying that the United Arab Emirates instructed the Libyan national army to block the oil field again. Libya's national oil company called on the national army to lift the blockade as soon as possible, and called on the United Nations Security Council to intervene in the issue.
The Libyan National Army said on the 11th that lifting the blockade of oil fields and oil ports needs to be based on a reasonable distribution of oil export revenue, and proposed specific conditions such as the establishment of a transparent mechanism with international supervision, the establishment of Libya's oil export revenue account in a third country, and the prohibition of the use of oil export earnings to finance militias and mercenaries.
Iraq is closer to the production reduction target and needs to continue to pay attention to the production cuts in July and August.
Official figures released on July 11th show that Iraq's oil production, including in the semi-autonomous Kurdish region, fell by 9% in June, but it is still higher than the production stipulated in the historic OPEC + production reduction agreement.
The Iraqi National Oil Company said it produced an average of 3.698 million barrels a day in June, compared with 4.068 million barrels a day in May. Iraq, the second-largest oil producer in OPEC, has agreed to reduce production to 3.592 million barrels a day after the May cut agreement takes effect.
The latest Platts survey shows that production in June was 3.7 million barrels a day, close to the lowest level in five years. The country has promised to make up for excess production through additional cuts in July, August and September.
Total exports, including exports from the Kurdish region, fell 11.4 per cent to 3.218 million b / d from 3.633 million b / d in May, according to the Iraqi National Oil Company.
Exports from Baghdad fell on average to 2.816 million barrels per day in June, in line with the Iraqi Oil Minister's forecast. In May, Iraq's average export volume was 3.212 million barrels per day.
Under the OPEC+ production reduction agreement, Angola, Iraq, Kazakhstan and Nigeria pledged to cut quotas further in July, August and September to make up for missed production cuts in May and June.
OPEC+ said in June that Iraq had pledged to reduce production to 57000 b / d below the quota in June and below 258000 b / d in July and August.
Therefore, the market still needs to pay attention to the production reductions in substandard oil-producing countries, especially Nigeria, Angola and Iraq, where the implementation of production reductions in these three countries will have an impact on the future direction of the oil market as the market digests the impact of OPEC+ reduction.
OPEC+ is expected to reduce the scale of production cuts at this week's joint ministerial meeting to put pressure on oil prices.
Oil prices fell ahead of this week's OPEC+ meeting, as the scale of OPEC+ production cuts could add to the pressure on the balance of the oil market as the epidemic spreads again.
OPEC+ will hold a joint ministerial meeting on July 15, and OPEC+ has successfully doubled the price of crude oil in the past few months through unprecedented production cuts. As restrictions are gradually lifted and fuel demand resumes, manufacturers plan to turn on the faucet slightly.
But the second spread of the epidemic has put oil consumption at risk of falling again, and the joint ministerial supervisory committee held by the OPEC+ on July 15th must weigh whether to maintain production of 9.6 million barrels per day for another month or to restore some supplies as originally planned, reducing the reduction to 7.7 million barrels per day.
According to several unnamed representatives, as demand recovery makes progress, they prefer the latter option. One of them said that the delivery schedule for August has been set, so it has basically been determined. Russia's major oil companies are preparing to increase production next month, while the Ministry of Energy did not give other guidance.
However, this strategy is not without risks. Despite the sharp rebound in oil prices, market sentiment remains fragile, especially in the event of a second spread of the epidemic.
In the US and Europe, spot crude oil futures still have price discounts, known as futures premiums, suggesting that the broader market is not yet tight. U.S. crude oil inventories are close to an all-time high, according to government and satellite data.
"the recovery that people had expected may not have been achieved yet," said Mohammad Darwazah, an analyst at Medley Global Advisors. "there is no doubt that the consensus is that the market will tighten, but we are not there yet."
Before the announcement of the OPEC+ joint ministerial meeting, the OPEC monthly report will be released on Tuesday. The market will pay attention to the implementation of OPEC production reduction, and the market needs to keep a close eye on it.
Us crude oil funds have seen a net outflow of funds for three consecutive days, and investors have reduced their net long positions in crude oil futures.
Investors withdrew $131 million from (USO), the US crude oil fund, in the last session, reducing its assets by 2.8 per cent to $4.48 billion, the lowest level since May 19 and the biggest one-day drop since April 6. The fund has seen net outflows for three consecutive days, totaling $267 million or 5.5 per cent.
At the same time, according to CFTC crude oil position data, speculative net long positions in crude oil held by speculators fell by 8509 contracts to 535317 contracts last week, indicating that investors are willing to be bullish on crude oil.
If the recent recovery in crude oil demand is slower than expected and OPEC+ reduces the scale of production cuts, this could put further pressure on oil prices.
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