Crude Oil Weekly Review: Five good supports, U.S. oil weekly has five consecutive positives, and oil distribution has risen to the highest level in the past three years
In the past week, international oil prices first fell and then rose. When the European and American stock markets fell sharply, the US and Burundi oil both fell by more than 2%, setting a new low in more than a week at that time. However, as the stock market bottomed out and crude oil inventories continued to decline, With tighter supply and improved demand prospects, oil prices have reversed their decline and recorded gains. U.S. crude oil closed up 2.77% this week, recording five consecutive positives on the weekly line, hitting a new high of $74.27 per barrel in the past two months. US$73.95/barrel. In addition, many well-known investment banks have expressed bullish outlook for crude oil.

In the past week, international oil prices first fell and then rose. When the European and American stock markets fell sharply, the US and Burundi oil both fell by more than 2%, setting a new low in more than a week at that time. However, as the stock market bottomed out and crude oil inventories continued to decline, With tighter supply and improved demand prospects, oil prices have reversed their decline and recorded gains. U.S. crude oil closed up 2.77% this week, recording five consecutive positives on the weekly line, hitting a new high of $74.27 per barrel in the past two months. US$73.95/barrel. In addition, many well-known investment banks have expressed bullish outlook for crude oil.
Brent crude oil once again rose to near a three-year high, closing at $77.20 per barrel, the highest closing price since October 2018. The weekly increase was about 2.27%.
Positive one: European and American stock markets have bottomed out, and oil prices have withstood the callback pressure
Earlier this week, investors were nervous about the Asian real estate market's worries. European and American stock markets fell sharply on Monday (September 20). The European market fear index once jumped to a nearly eight-month high, and oil prices fell more than 2%.
Among them, the German DAX index fell 2.3% on Monday (September 20), a record low in more than four months; the UK FTSE 100 index fell 0.86%, France fell 1.74%, and the Stoxx 600 index fell 1.67%, both hitting nearly two Month low.
US stocks also experienced a night of horror on Monday. The Nasdaq fell 3% during the intraday session; the Dow fell nearly 1,000 points during the intraday session; and the Russell 2000 Index fell 3.6% once, the largest intraday drop since March 23. Over 10,000 stocks fell on the US stock market that day, and the rise/fall ratio of individual stocks was close to 1:10.
The S&P 500 and Nasdaq both recorded their largest single-day percentage declines since May on Monday.
However, after stabilizing on Tuesday, in the second half of this week, the market's worries cooled down, and European and American stock markets rebounded one after another, with weekly gains, and both U.S. and cloth oils turned from declines to rises.
(U.S. S&P 500 daily chart)
Good fortune two: Output in the Gulf of Mexico is interrupted, OPEC+ is slow to increase production
There are signs that due to storm damage, some output in the U.S. Gulf of Mexico will be interrupted for several months, and OPEC is once again unable to produce enough oil to meet global demand, which to a certain extent provides upward momentum for oil prices.
The last two hurricanes have disrupted supplies in the U.S. Gulf of Mexico, limiting the decline in oil prices. As of last Friday, only 23% of production companies had interrupted output, or 422,078 barrels per day.
Royal Dutch Shell said that due to the destruction of Hurricane Ida, a facility in the Gulf of Mexico is expected to be closed for maintenance before the end of 2021, and then crude oil prices have narrowed their decline.
Analysts pointed out that delays in maintenance during the epidemic or insufficient investment over the years have made it difficult for some members of the Organization of Petroleum Exporting Countries (OPEC) and their allies to increase production.
Several OPEC+ members, such as Nigeria, Angola and Kazakhstan, have struggled to increase production in recent months because of insufficient investment for many years or the new crown epidemic that has delayed large-scale maintenance work.
In the past, fraud and excessive production have been one of the main problems facing OPEC, but the situation has changed in recent years because investment has flowed into the renewable energy sector as part of the energy transition.
Some member states are unable to increase production to the agreed level, which indicates that as the organization continues to implement its monthly production increase plan to gradually remove the remaining part of the 2020 record production reduction plan, a supply gap may appear.
Morgan Stanley analysts Martijn Rats and Amy Sergeant said OPEC+ may slow down or suspend the proposed production increase plan next year to balance the global market.
(Weekly chart of US crude oil contracts)
Positive three: soaring natural gas prices drive up oil prices
In recent months, global natural gas prices have soared due to increased demand, especially from Asia, low natural gas inventories, and tight supply of natural gas from Russia.
ANZ Bank analysts said that due to the rise in natural gas and coal prices, the global utility sector switched to fuel oil, and the shutdown of the Gulf of Mexico after Hurricane Ida continued, which meant that the supply was reduced.
Citi analysts said in the report that in the coming weeks and months, global natural gas prices may continue to show a parabolic trend, with strong demand and insufficient supply leading to a sharp tightening of the market. Any unexpected surge in demand or supply disruption may push prices up further. Citigroup said that the ripple effect of soaring natural gas prices on other fuels is more extensive than initially thought. Switching to liquefied petroleum gas for heating will affect naphtha and gasoline. Increasing the use of kerosene will affect the price of aviation fuel and diesel. Fuel oil will play a greater role in power generation. Under the situation of limited global crude oil production, Europe The tight supply of natural gas will lead to an increase in oil demand.
Good four: the United States relaxes border controls, boosting demand prospects
The United States announced this week that it will soon allow the entry of most foreign air passengers who have received the full course of COVID-19 vaccination, further improving the outlook for crude oil demand.
These measures are the most thorough adjustment to the travel policy of the United States in months, widening the gap between the treatment of vaccinated and non-vaccinated people. The new regulations will replace existing regulations that prohibit foreigners from certain regions (including Europe) from traveling to the United States.
Although this move will open the United States to millions of vaccinators, the White House sees it as an epidemic prevention operation because it will implement stricter testing rules and new contact tracing mechanisms. The White House said the new policy will take effect in early November, but did not disclose the exact date.
Jeff Zients, Coordinator of the White House's New Coronary Epidemic Response Team, told reporters on Monday, “We know that vaccines are effective, including the delta strain. Vaccination is the best line of defense to stop the epidemic. The above vaccination requirements are what we can use. The best weapon to ensure personal safety and prevent the spread of the virus."
British Airways chief executive Sean Doyle said that the US decision represents the arrival of a "historic moment", saying that consumers can now book tickets with confidence.
Rystad Energy’s crude oil market analyst Louise Dickson said in a report that in terms of oil demand, there is no new blockade in Europe, the strong recovery of China’s road traffic, and the removal of restrictions on foreign tourists from the United States in November, all of which will improve the future. Demand growth prospects for the last quarter.
Good news: EIA crude oil inventories fell for the seventh consecutive week
US Energy Information Administration (EIA) data on Wednesday (September 22) showed that last week US crude oil inventories fell to the lowest level in nearly three years. As of the week of September 17, crude oil inventories fell by 3.5 million barrels to 414 million barrels. Analysts estimated a decrease of 2.4 million barrels. Currently, crude oil inventories are at their lowest level since October 2018. Tight supply and strong demand have helped push up oil prices.
The U.S. Energy Information Administration (EIA) data also shows that the capacity utilization rate of US East Coast refineries has increased to 93%, the highest since May 2019, which is a sign of increasing fuel demand.
Financial blog Zero Hedging commented on US EIA data. U.S. crude oil production is still severely affected by Hurricane Ida. Just this week, Royal Dutch Shell announced that due to the damage caused by “Ida”, part of its offshore production in the Gulf of Mexico will be suspended. By the end of this year. Due to extreme weather disrupting the supply of crude oil in the United States, and rising natural gas prices triggering expectations that consumers may switch to oil, crude oil prices have risen this month.
Some supply disruptions may last for several months, leading to significant reductions in U.S. and global inventories. Traders said that US refiners are looking to replace Gulf of Mexico crude oil and purchase crude oil from Iraq and Canada instead.
Phil Flynn, a senior analyst at Price Futures Group, said, “The market is beginning to pay attention to real-world issues-there are more and more discussions about global inventory tightening, and people are worried that there will be supply problems as the winter comes. Taking a tougher stance may bring more support to the oil market.
Goldman Sachs expects oil prices to reach US$90 per barrel
Jeff Currie, Global Head of Commodity Research at Goldman Sachs, said that if it turns out that the northern hemisphere winter is colder than usual this year, crude oil prices could soar to $90 per barrel. This is $10 higher than Goldman's current forecast. At the same time, high natural gas prices have brought catastrophic consequences to the British power supply companies.
In an interview with Bloomberg TV on Wednesday, Currie said that in the context of global crude oil production constraints, the tight supply of natural gas in Europe will lead to an increase in global oil demand. The global factors he mentioned included the interruption of crude oil production in the Gulf of Mexico caused by hurricanes.
Currie said that the rise in natural gas prices shows no signs of abating due to tight supply and surge in demand, "especially outside the United States." "The pressure on the supply chain is too great to withstand any type of interruption."
Lipow Oil Associates President Andrew Lipow said that as global demand recovers and inventories continue to decrease, crude oil prices are still supported.
Phil Flynn, a senior market analyst at Price Futures Group Inc., said that market attention has returned to supply and demand, the market looks very bullish, and there may be insufficient supply. As winter approaches, there are real concerns about supply.
In addition, UBS analysts said that Brent crude oil may reach $80 at the end of September due to reduced inventories, OPEC production cuts and strong Middle East demand.
Don't be blindly optimistic! Russia is pessimistic about global oil demand and pays attention to Iran and U.S. supplies
However, the crude oil bulls should not "get away", because there are still several negative and potential negative factors in the crude oil market, and we still need to beware of the possibility of high oil prices and wide fluctuations.
On Tuesday (September 21), Russia’s draft national budget reported that Russia believes that as the energy balance changes, global oil demand may not be able to return to the level before the 2019 pandemic.
In addition, the Federal Reserve is expected to begin tightening monetary policy this week, which may reduce investors’ appetite for high-risk assets such as oil.
China's first public sale of national crude oil reserves slightly suppressed the increase in oil prices.
Iran’s official Islamic news agency said on September 22 that Iran’s Foreign Minister Amir Abdullahhiyan was meeting with the foreign ministers of the parties involved in the Iranian nuclear agreement in New York. The Iranian Ministry of Foreign Affairs stated that negotiations on the resumption of the Iranian nuclear agreement will be restarted in early October. Iran has notified Britain, France, Germany, China and Russia.
The Iranian Foreign Minister stated that Iran will continue to advance negotiations, but so far, the Biden administration’s policies and practices regarding Iran and the Iran nuclear agreement are not constructive.
In addition, in the United States, drilling companies added 10 active rigs this week, increasing the number of oil and gas rigs for the 14th consecutive month. Investors need to beware of the risk of a substantial increase in U.S. supply.
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