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Market News Oil price today: WTI oil approaches $70 and going to face big demand this year end

Oil price today: WTI oil approaches $70 and going to face big demand this year end

Iran is shrouded in the shadow of war, and the outlook for global demand is optimistic. Crude oil continues to reach more than two years’ high. U.S. WTI crude oil rose above US$69 and approached the US$70 mark. The market predicts that by the second half of this year, the supply will not be able to meet the needs of major oil-consuming regions in the US, China and Europe.

LEO
2021-06-03
603

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US WTI crude oil futures prices rose 48 cents, or 0.70%, to US$69.31 per barrel.

Brent crude oil futures prices rose 53 cents, or 0.74%, to US$71.88 per barrel.

Natural gas prices rose 0.29% to $3.083.


In addition, according to a report of API, for the week ended May 28, US crude oil inventories  decreased by 5.366 million barrels, a drop far exceeding market expectations and a reduction of 2.114 million barrels. The one-week reduction of 43.9 has greatly expanded.


Two oils hit the highest closing price in 2 years

In trading on Tuesday, WTI crude oil and Brent crude oil futures prices both hit their highest closing prices in more than two years, due to OPEC+ maintaining the current plan to gradually increase production by the end of July.


James Williams, an energy economist at WTRG Economics, said that the main drivers of Wednesday's oil price increase were "the expectation that gasoline inventories will be impacted in the latest data" and "the expectation that the American Volkswagen, who was stuck at home last year, will drive on the road again."


Since Monday is the Memorial Day holiday, the weekly oil supply data of the U.S. Energy Information Administration (EIA) will be released one day later than usual until Thursday. The American Petroleum Institute (API) also postponed the release of oil inventory data by one day until later on Wednesday.


According to a survey by S&P Global Platts, analysts on average expected last week (as of 5/28) that US crude oil inventories fell by 3.3 million barrels, gasoline inventories fell by 1.1 million barrels, and distilled oil inventories fell by 1.6 million barrels.


API announced after the close of crude oil on Wednesday that crude oil inventories fell by 5.36 million barrels last week (as of 5/27), which was much larger than the decline announced the previous week (439,000 barrels).


In addition, API also announced that gasoline inventories increased by 2.51 million barrels and distilled oil increased by approximately 1.59 million barrels last week.


Iranian oil hard to returns to the oil market 

At the same time, agencies including OPEC+ predict that by the second half of 2021, fuel supply will fall short of demand. This forecast boosted oil prices.


According to OPEC+ data, by the end of 2021, the average daily demand for fuel will reach 99.8 million barrels, while the supply is only 97.5 million barrels, with a gap of more than 2 million barrels. The shortfall in supply is mainly due to the economic rebound of the world's top two oil consumers, the United States and China, and the gradual lifting of the blockade by the United Kingdom and many countries in continental Europe.


Vivek Dhar, a commodity analyst at Royal Bank of Canada, said in a report: "The fuel demand in the peak season for self-driving travel in the United States is higher than normal. The traffic flow in the UK now exceeds the level before the outbreak. The United States, Europe and China will continue to lead the demand recovery."


On the supply side, OPEC+ agreed on Tuesday to continue to gradually relax production cuts before the end of July as originally planned. However, because OPEC is cautious about the market conditions in the second half of 2021, it did not disclose the future supply policy trends.


At the same time, due to the slow progress in negotiations between the United States and Iran to return to the 2015 nuclear agreement, the time for Iranian oil to return to the market has been delayed.

Next week, the parties to the Iranian nuclear agreement will continue negotiations, but some investors still doubt whether an agreement can be reached. Vivek Dahl said: "It seems unlikely that a solution will be found now."


Tonight, investors also need to pay attention to the official inventory data released by the U.S. Energy Information Administration (EIA).



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