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Market News Crude oil trading reminder: inventories fell more than expected, oil prices rose more than 2%, OPEC+ production increase may not be able to balance the market
Crude oil trading reminder: inventories fell more than expected, oil prices rose more than 2%, OPEC+ production increase may not be able to balance the market
In Asian hours on June 3, U.S. oil was now at $117.40 a barrel; oil prices rose 2.4% on Thursday, as U.S. crude inventories fell more than expected amid strong demand for fuel. The oil market was not affected by the news that OPEC+ agreed to increase crude oil production to make up for the decline in Russian output; the non-farm payrolls data were focused on the day.
2022-06-03
9915
In Asian hours on Friday (June 3), U.S. oil was now at $117.40 a barrel; oil prices rose 2.4% on Thursday, as U.S. crude inventories fell more than expected amid strong demand for fuel. Oil markets shrugged off news that OPEC+ agreed to increase crude output to make up for falling Russian output.
During the day, focus on the non-agricultural data for May, and the weekly position report released by the US Commodity Futures Trading Commission (CFTC) at 3:30 on Saturday.
[U.S. crude oil inventories fell by 5.1 million barrels last week]
U.S. crude and refined product inventories fell last week as demand continued to outstrip supply, the U.S. Energy Information Administration (EIA) reported on Thursday, while commercial crude inventories fell despite more strategic reserves entering the market. U.S. crude inventories fell by 5.1 million barrels in the week to May 27 to 414.7 million barrels, compared with analysts' expectations for a drop of 1.3 million barrels in a Reuters poll.
Crude inventories fell despite the U.S. government releasing more than 5 million barrels of oil reserves in the latest week. Net crude oil imports rose by 83,000 bpd, the EIA said.
Refinery throughput fell by 236,000 bpd last week, and refinery capacity utilization nationwide fell 0.6 percentage points to 92.6%, but the numbers remained strong as the U.S. entered the peak summer driving season. Matt Smith, chief U.S. oil analyst at Kpler, said, "Although gasoline prices at the gas station hit a record, gasoline inventories fell as implied demand rose; while distillate inventories also fell slightly, implied demand rose slightly," U.S. gasoline inventories Distillate stockpiles, which include diesel and heating oil, fell 530,000 barrels last week, down 711,000 barrels.
[U.S. stocks rise as traders weigh mixed economic data]
U.S. stocks rose, snapping a two-day losing streak ahead of the latest nonfarm payrolls report on Friday. Traders expect labor demand to cool, possibly easing some inflation concerns. The S&P 500 rose 1.8%, with materials and communications services among the top gainers, while the Nasdaq 100 gained 2.8% as Microsoft erased earlier losses.
“Apart from the recent rally, the technicals in this market have barely changed, which makes us not call it safe,” said Scott Brown, technical market strategist at LPL Financial. The field is still reasonable."
Fed Vice Chairman Brainard said that market expectations for 50 basis points of interest rate hikes this month and next are reasonable, and there is currently no reason for the Fed to suspend tightening in September.
[U.S. initial jobless claims fell slightly last week, indicating a tight labor market]
U.S. initial jobless claims fell last week, remaining at record lows amid a tight labor market. Initial jobless claims fell by 11,000 to 200,000 for the week ended May 28, Labor Department data showed on Thursday. The median forecast of economists polled by Bloomberg was 210,000.
Continuing jobless claims fell to 1.31 million in the week to May 21, the lowest level since 1969.
The report highlights the current strength and tension in the job market. Data on Wednesday showed layoffs were at a record low, with each unemployed person facing nearly two job openings in the United States. Looking ahead, though, labor demand may eventually cool as the Fed hikes rates sharply.
[EU approves partial embargo on Russian oil and sanctions on Russia's largest bank]
The EU approves a sixth round of sanctions, including a partial embargo on Russian oil. A meeting of diplomats on Thursday supported the plan, people familiar with the matter said. The move would be the EU's toughest yet to curb Russia's ability to finance an invasion of Ukraine. The measures will ban the purchase of Russian crude oil shipped to member states after six months and refined products after eight months. Pipeline crude is not included, a compromise for Hungary and other landlocked countries that rely on Russian supplies via the Druzhba pipeline. The sanctions package also includes expelling Russia's largest bank, Sberbank, from the international payments system SWIFT. The Moscow Credit Bank and the Russian Agricultural Bank were also expelled.
Russian Deputy Prime Minister Novak said on Thursday that the European Union's ban on oil imports from Russia could lead to a severe shortage of oil and refined products in Europe, and he also called cooperation with the Organization of the Petroleum Exporting Countries (OPEC) and its allies OPEC+ " Effective". Speaking on state television, Novak also said Russia would try to sell oil to other markets, calling the EU decision "political."
[US announces new round of sanctions on Russia]
On June 2, local time, the White House announced new sanctions against Russia. In a statement, the White House said the new round of sanctions was a further step in the U.S. The new U.S. Treasury Department sanctions will target key Russian government and business officials. The U.S. State Department has also increased sanctions on a number of wealthy Russian businessmen with close ties to Russian President Vladimir Putin.
In addition, the U.S. Department of Commerce has imposed further restrictions on the technology and other materials Russia needs. The U.S. government decided to add 71 parties from Russia and Belarus to the Entity List, denying them access to products made using U.S. technology or software.
[OPEC+ production increase is not enough to balance the market]
JPMorgan analyst Natasha Kaneva believes that OPEC+’s decision to increase production quotas for July and August will not be enough to change the global oil balance. The increased production did not offset seasonal peaks and increased demand, saying risks to the bank's supply forecast were skewed to the downside. JPMorgan had previously forecast a loss of up to 1.5 million barrels per day (bpd) of Russian crude production, but now sees that as difficult because of a new EU sanctions plan that includes "an immediate ban on new contracts to insure ships carrying Russian oil" . JPMorgan maintained its previous forecast for an average Brent price of $114 per barrel in the second quarter of 2022, and maintained its forecast for an average price of $104 per barrel in 2022, with the monthly average peaking at $122 in June.
[OPEC+ agrees to increase production by a larger amount in the coming months]
Faced with months of pressure from major consumers such as the United States to increase output to ease the pain of high oil prices, OPEC+ will increase output by about 50%. The ministers agreed on Thursday that the group increased production by 648,000 bpd in July and August, up from 432,000 bpd in recent months, said delegates at the meeting, who spoke on condition of anonymity because of the discussion of non-public information.
Delegates at the meeting said the increase would be distributed proportionally among member countries as usual. Production quotas for countries that have failed to increase production, such as Angola, Nigeria and Russia, will still be raised. This could mean that the actual increase will be lower than the official figures, as has often been the case in recent months.
Russian Deputy Prime Minister Alexander Novak said in an interview with Rossiya 24 that the OPEC+ decision to increase production by 648,000 barrels per day in July and August was necessary to meet the growth in demand, following an earlier OPEC+ decision to increase production in September The 432,000 bpd plan, "without a doubt, is the right decision to balance supply and demand in the market," as Russia's June production recovery peaked compared to the level of production in recent months.
Novak said that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months to be implemented, during which time the market will rebalance and Russian crude oil and refined oil will flow to new markets.
Analysts at the Royal Bank of Canada said the OPEC+ deal to increase production on Thursday may depend on Saudi Arabia to implement, as spare capacity available in the United Arab Emirates may have already been used. The UAE appears to have spare capacity on paper, but the country has hit its monthly production quota since the third quarter of 2021, so an additional 425,000 bpd of production against the established quota is unlikely. Even countries that have been raising output on time may now face near-term export restrictions, such as Iraq, OPEC's second-largest producer. So the task falls to Saudi Arabia, which looks set to ramp up production to around 11 million bpd in July and August, from the country's "limit policy output" set in April 2020 of 11.5 million bpd .
[The U.S. is still buying a lot of Russian oil]
The latest statistics from the U.S. Energy Information Administration (EIA) show that in March this year, Russia climbed from the ninth largest crude oil supplier to the United States to sixth, reaching 4.218 million barrels. At the same time, in terms of the overall supply of crude oil and refined oil products to the United States, Russia still ranks third, increasing by 8.7% year-on-year to 17.825 million barrels.
[Many health departments in the United States announced the discovery of monkeypox cases]
On June 2, local time, the public health departments of Chicago, Philadelphia and Los Angeles announced the discovery of monkeypox cases, which are awaiting final confirmation from the US Centers for Disease Control and Prevention. The Los Angeles Department of Public Health said the patient in the area was an adult resident who had recently traveled and had close contact with a monkeypox case in the destination. The Chicago Department of Public Health said the patient in the area was an adult male who had recently traveled to Europe. The Philadelphia Department of Health has not released details of the patients.
Overall, the decline in inventories and the increase in demand boosted oil prices; although OPEC+ agreed to increase production by a larger amount in the next few months, after the new round of sanctions against Russia by the EU, the United States has also started a new round of sanctions against Russia, and geopolitical tensions The situation continued to escalate and the number of people applying for unemployment benefits fell, all of which helped the bulls; oil prices in the day were short-term concerned about the evening non-agricultural data.
At 08:00 GMT+8, U.S. crude oil is now at $117.40 a barrel.
During the day, focus on the non-agricultural data for May, and the weekly position report released by the US Commodity Futures Trading Commission (CFTC) at 3:30 on Saturday.
Bullish factors affecting oil prices
[U.S. crude oil inventories fell by 5.1 million barrels last week]
U.S. crude and refined product inventories fell last week as demand continued to outstrip supply, the U.S. Energy Information Administration (EIA) reported on Thursday, while commercial crude inventories fell despite more strategic reserves entering the market. U.S. crude inventories fell by 5.1 million barrels in the week to May 27 to 414.7 million barrels, compared with analysts' expectations for a drop of 1.3 million barrels in a Reuters poll.
Crude inventories fell despite the U.S. government releasing more than 5 million barrels of oil reserves in the latest week. Net crude oil imports rose by 83,000 bpd, the EIA said.
Refinery throughput fell by 236,000 bpd last week, and refinery capacity utilization nationwide fell 0.6 percentage points to 92.6%, but the numbers remained strong as the U.S. entered the peak summer driving season. Matt Smith, chief U.S. oil analyst at Kpler, said, "Although gasoline prices at the gas station hit a record, gasoline inventories fell as implied demand rose; while distillate inventories also fell slightly, implied demand rose slightly," U.S. gasoline inventories Distillate stockpiles, which include diesel and heating oil, fell 530,000 barrels last week, down 711,000 barrels.
[U.S. stocks rise as traders weigh mixed economic data]
U.S. stocks rose, snapping a two-day losing streak ahead of the latest nonfarm payrolls report on Friday. Traders expect labor demand to cool, possibly easing some inflation concerns. The S&P 500 rose 1.8%, with materials and communications services among the top gainers, while the Nasdaq 100 gained 2.8% as Microsoft erased earlier losses.
“Apart from the recent rally, the technicals in this market have barely changed, which makes us not call it safe,” said Scott Brown, technical market strategist at LPL Financial. The field is still reasonable."
Fed Vice Chairman Brainard said that market expectations for 50 basis points of interest rate hikes this month and next are reasonable, and there is currently no reason for the Fed to suspend tightening in September.
[U.S. initial jobless claims fell slightly last week, indicating a tight labor market]
U.S. initial jobless claims fell last week, remaining at record lows amid a tight labor market. Initial jobless claims fell by 11,000 to 200,000 for the week ended May 28, Labor Department data showed on Thursday. The median forecast of economists polled by Bloomberg was 210,000.
Continuing jobless claims fell to 1.31 million in the week to May 21, the lowest level since 1969.
The report highlights the current strength and tension in the job market. Data on Wednesday showed layoffs were at a record low, with each unemployed person facing nearly two job openings in the United States. Looking ahead, though, labor demand may eventually cool as the Fed hikes rates sharply.
[EU approves partial embargo on Russian oil and sanctions on Russia's largest bank]
The EU approves a sixth round of sanctions, including a partial embargo on Russian oil. A meeting of diplomats on Thursday supported the plan, people familiar with the matter said. The move would be the EU's toughest yet to curb Russia's ability to finance an invasion of Ukraine. The measures will ban the purchase of Russian crude oil shipped to member states after six months and refined products after eight months. Pipeline crude is not included, a compromise for Hungary and other landlocked countries that rely on Russian supplies via the Druzhba pipeline. The sanctions package also includes expelling Russia's largest bank, Sberbank, from the international payments system SWIFT. The Moscow Credit Bank and the Russian Agricultural Bank were also expelled.
Russian Deputy Prime Minister Novak said on Thursday that the European Union's ban on oil imports from Russia could lead to a severe shortage of oil and refined products in Europe, and he also called cooperation with the Organization of the Petroleum Exporting Countries (OPEC) and its allies OPEC+ " Effective". Speaking on state television, Novak also said Russia would try to sell oil to other markets, calling the EU decision "political."
[US announces new round of sanctions on Russia]
On June 2, local time, the White House announced new sanctions against Russia. In a statement, the White House said the new round of sanctions was a further step in the U.S. The new U.S. Treasury Department sanctions will target key Russian government and business officials. The U.S. State Department has also increased sanctions on a number of wealthy Russian businessmen with close ties to Russian President Vladimir Putin.
In addition, the U.S. Department of Commerce has imposed further restrictions on the technology and other materials Russia needs. The U.S. government decided to add 71 parties from Russia and Belarus to the Entity List, denying them access to products made using U.S. technology or software.
[OPEC+ production increase is not enough to balance the market]
JPMorgan analyst Natasha Kaneva believes that OPEC+’s decision to increase production quotas for July and August will not be enough to change the global oil balance. The increased production did not offset seasonal peaks and increased demand, saying risks to the bank's supply forecast were skewed to the downside. JPMorgan had previously forecast a loss of up to 1.5 million barrels per day (bpd) of Russian crude production, but now sees that as difficult because of a new EU sanctions plan that includes "an immediate ban on new contracts to insure ships carrying Russian oil" . JPMorgan maintained its previous forecast for an average Brent price of $114 per barrel in the second quarter of 2022, and maintained its forecast for an average price of $104 per barrel in 2022, with the monthly average peaking at $122 in June.
Negative factors affecting oil prices
[OPEC+ agrees to increase production by a larger amount in the coming months]
Faced with months of pressure from major consumers such as the United States to increase output to ease the pain of high oil prices, OPEC+ will increase output by about 50%. The ministers agreed on Thursday that the group increased production by 648,000 bpd in July and August, up from 432,000 bpd in recent months, said delegates at the meeting, who spoke on condition of anonymity because of the discussion of non-public information.
Delegates at the meeting said the increase would be distributed proportionally among member countries as usual. Production quotas for countries that have failed to increase production, such as Angola, Nigeria and Russia, will still be raised. This could mean that the actual increase will be lower than the official figures, as has often been the case in recent months.
Russian Deputy Prime Minister Alexander Novak said in an interview with Rossiya 24 that the OPEC+ decision to increase production by 648,000 barrels per day in July and August was necessary to meet the growth in demand, following an earlier OPEC+ decision to increase production in September The 432,000 bpd plan, "without a doubt, is the right decision to balance supply and demand in the market," as Russia's June production recovery peaked compared to the level of production in recent months.
Novak said that the EU's import ban on Russian seaborne crude oil and petroleum products will take 6-8 months to be implemented, during which time the market will rebalance and Russian crude oil and refined oil will flow to new markets.
Analysts at the Royal Bank of Canada said the OPEC+ deal to increase production on Thursday may depend on Saudi Arabia to implement, as spare capacity available in the United Arab Emirates may have already been used. The UAE appears to have spare capacity on paper, but the country has hit its monthly production quota since the third quarter of 2021, so an additional 425,000 bpd of production against the established quota is unlikely. Even countries that have been raising output on time may now face near-term export restrictions, such as Iraq, OPEC's second-largest producer. So the task falls to Saudi Arabia, which looks set to ramp up production to around 11 million bpd in July and August, from the country's "limit policy output" set in April 2020 of 11.5 million bpd .
[The U.S. is still buying a lot of Russian oil]
The latest statistics from the U.S. Energy Information Administration (EIA) show that in March this year, Russia climbed from the ninth largest crude oil supplier to the United States to sixth, reaching 4.218 million barrels. At the same time, in terms of the overall supply of crude oil and refined oil products to the United States, Russia still ranks third, increasing by 8.7% year-on-year to 17.825 million barrels.
[Many health departments in the United States announced the discovery of monkeypox cases]
On June 2, local time, the public health departments of Chicago, Philadelphia and Los Angeles announced the discovery of monkeypox cases, which are awaiting final confirmation from the US Centers for Disease Control and Prevention. The Los Angeles Department of Public Health said the patient in the area was an adult resident who had recently traveled and had close contact with a monkeypox case in the destination. The Chicago Department of Public Health said the patient in the area was an adult male who had recently traveled to Europe. The Philadelphia Department of Health has not released details of the patients.
Overall, the decline in inventories and the increase in demand boosted oil prices; although OPEC+ agreed to increase production by a larger amount in the next few months, after the new round of sanctions against Russia by the EU, the United States has also started a new round of sanctions against Russia, and geopolitical tensions The situation continued to escalate and the number of people applying for unemployment benefits fell, all of which helped the bulls; oil prices in the day were short-term concerned about the evening non-agricultural data.
At 08:00 GMT+8, U.S. crude oil is now at $117.40 a barrel.
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