Crude oil trading reminder: The production was disturbed and the supply was tight, the UK closed some gas stations, and the oil distribution hit a three-year high

During the Asian session on Monday (September 27), crude oil prices continued their upward trend last week, with U.S. oil hitting a two-month high, approaching the 75 mark; oil distribution jumped by about 1%, hitting a three-year high to $78.17 per barrel; oil prices It rose for the fifth consecutive week last week, reaching a nearly three-year high; because the global energy crisis is set to boost crude oil demand, inventories from the United States to Asia are falling.



In the day, we will focus on the initial value of the monthly rate of durable goods orders in the United States in August, and the Fed Williams and Evans delivered speeches.

Bullish factors affecting oil prices

[U.S. August new residential sales growth exceeds expectations]

The growth rate of new residential sales in the United States in August exceeded expectations, reaching the highest level in four months, indicating that builders are gradually digesting the backlog of orders and demand is stabilizing.

Government data released last Friday showed that the sales of newly built single-family homes in August increased by 1.5%, equivalent to an annual rate of 740,000 units, and the data in July was revised upward to 729,000. Economists surveyed by Bloomberg expected a median of 715,000.

The residential real estate industry is facing a series of unfavorable factors. Although the basic demand is stable, it is difficult for builders to keep up with order demand due to supply chain bottlenecks and difficulty in recruiting workers. The increase in sales in August was driven by the sales of off-plan properties that have not yet started, which means that construction activities will also remain active in the next few months. The report also shows that the median sale price of a new home is a record high of US$390,900.

[U.S. stocks ended with gains last week, energy and financial stocks led the market]

Although the global stock market was turbulent earlier this week, U.S. stocks ended with a rise last Friday. Traders ignored the Fed’s stimulus measures, Evergrande’s risk spillover and China’s latest crackdown on cryptocurrencies. The S&P 500 rebounded late, expanding weekly gains, with energy and financial stocks leading the way.

The Bank of America Research report quoted EPFR Global data as saying that as of the week of September 22, $28.6 billion flowed out of U.S. equity funds, the largest since February 2018. Even with a large outflow of funds, the private customers of Bank of America still have heavy stocks, and about 65% of the assets under management are invested in stocks. The two regional Fed presidents stated that the US economy has met the conditions for the Fed to start reducing asset purchases soon. Powell rate the Fed Senior officials listened to public opinion and found that the economic impact of the epidemic was more pessimistic than the data.

[Supply is tight due to disruption of crude oil production]

Oil prices rose last Friday for the third consecutive week to a nearly three-year high, as global oil production interruptions forced energy companies to extract large amounts of crude oil from inventories. China's first public sale of national crude oil reserves slightly suppressed the rise in oil prices.

This is the highest closing price of Brent crude oil for the second consecutive day since October 2018, and the highest price for U.S. crude oil since it closed in July 2021 for the second consecutive day.

Brent crude oil has risen for the third consecutive week, and US crude oil has risen for the fifth consecutive week, mainly due to the destruction of U.S. Gulf Coast production by Hurricane Ida at the end of August. New York Port ultra-low sulfur diesel futures also closed at their highest closing price since October 2018.

According to data from data analysis company Kayrros, global onshore crude oil inventories fell by nearly 21 million barrels last week, led by major Asian countries, while US inventories were close to a three-year low.

Rystad Energy's crude oil market analyst Louise Dickson said in a report that the surge in natural gas prices is expected to force some consumers to switch to oil, thereby further tightening the market before the arrival of the northern hemisphere winter. Factory demand may need to consume inventory. In terms of oil demand, “there is no new blockade in Europe, the strong recovery of Asian Highway traffic, and the removal of foreign tourist entry restrictions from the United States in November, all of which enhance the prospects for demand growth in the coming quarters. ."

Some supply disruptions may last for several months and have led 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. India's August crude oil imports rebounded from a nearly one-year low in July to a three-month high.

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.

[U.S. natural gas futures prices rise, concerns about tight inventories persist]

Due to the rebound in LNG exports, the output is still sluggish, and people are worried about the low level of natural gas inventories before the winter, and US natural gas prices have risen. Gary Cunningham, head of market research at Tradition Energy, said, “Although the weather has been relatively mild in the past few weeks and the LNG facilities have been offline, the injection of reserves is still very small. Some offshore rigs may be shut down for several months, thereby inhibiting supply in the winter. The news also supported natural gas prices." After Hurricane Ida, about 24% of the gas production capacity in the Gulf of Mexico is still closed, and production is not expected to fully recover until next year.

[BP closed some gas stations in the UK]

BP announced on the 23rd that due to the shortage of truck drivers across the country, it is difficult to transport refined gasoline at refineries. The company had to temporarily close some gas stations in the UK. On the same day, people drove in line to wait for refueling outside many gas stations in London.

According to Reuters, BP has about 1,200 private-brand gas stations across the UK. After announcing the closure of some gas stations on the 23rd, the company will give priority to expressway service areas, arterial roads and high-demand stations. Esso Petroleum Co., Ltd., a subsidiary of Exxon Mobil Corporation of the United States, also stated that its few gas stations in the UK were also affected by distribution problems.

Negative factors affecting oil prices

[Negotiations on the Iranian nuclear agreement should be "fruitful"]

Iranian Foreign Minister Abdullahhiyan stated that the negotiations on the Iranian nuclear agreement should be "fruitful." The Iranian side is studying ways to resume negotiations on the Iranian nuclear agreement and will return to the negotiating table as soon as possible. Iran does not intend to stay away from the negotiating table, and will definitely seek negotiations in line with national rights and interests. Once Iran completes its review of the relevant documents of the Iranian nuclear agreement, it will exchange views during the negotiations.

Baker Hughes Oil Services said last week that drilling companies added 10 active drilling rigs this week, U.S. drilling companies added oil and gas rigs for 14 consecutive months, and U.S. drilling companies added oil and gas rigs for the third consecutive week.



Overall, driven by the global energy crisis, reduced inventories, and increased global demand, oil prices will continue to lean towards a bullish tone; however, it is necessary to pay attention to news related to Iran’s nuclear negotiations or to limit the increase in oil prices in the short term.

GMT+8 8:20, U.S. crude oil is now quoted at $74.88/barrel.