U.S. oil tries to stand above the 66 US dollars, short-term rebound demand still exists
On July 20, the European market and the US oil stabilized, and plunged nearly 7% in the previous day. The selling pressure pushed oil prices to a two-month low, mainly because the market was concerned about the delta variant virus and the macro background, not Major reflections on oil fundamentals in the future. The current global epidemic may indeed affect the demand in some countries and regions, but this will only slow down but not reverse the continued upward trend of crude oil demand. Therefore, short-term oil prices still rebound in demand, and there is a high probability that the market will see Rose back to 70 dollars.

In the European market on Tuesday (July 20), US crude oil futures prices stabilized, and on Monday (July 19) fell nearly 7%. Last weekend, the Organization of Petroleum Exporting Countries and its allies (OPEC+) oil-producing countries signed a new supply The agreement eased short-term supply pressure and led to a retreat of high oil prices. In addition, investors’ concerns about the recurrence of the new crown virus infection have led to a sharp drop in oil prices.
As of press time, the US crude oil futures price was reported at 66.42 US dollars/barrel, down 0.21%, and the Brent crude oil futures price was reported at 68.60 US dollars/barrel, down 0.06%.
Royal Bank of Canada Capital Markets (RBC Capital Markets) said in a report that the selling pressure pushed crude oil prices to a two-month low, mainly due to market concerns about the delta variant virus and the macro background, rather than the future. A major reflection on the fundamentals of oil.
Earlier, OPEC+ reached a compromise on increasing production on Sunday, but Royal Bank of Canada said that this was more of an "unfortunate coincidence, not a catalyst," and pointed out that the global stock market fell sharply and the bond market rose. US officials said on Friday that the delta variant of the new coronavirus is more contagious than previous viruses and is now the main strain of the virus worldwide.
Approximately 100 countries around the world have discovered this virus. Many countries have launched vaccination programs uncoordinatedly, which are disrupting the battle against this virus and increasing the possibility of further blockades, which will combat the demand for petroleum products.
The United States has added at least 56,898 new confirmed cases of new coronary pneumonia, with a total of 34.31 million new cases, and at least 213 new deaths, with a total of 608,126. Germany added 1,183 confirmed cases of new crowns, a total of 3,746,410, and 34 new deaths from new crowns, a total of 91397.
The US State Department and the Centers for Disease Control and Prevention stated that people should avoid traveling to the UK and raise the warning level to "Level 4". The US Centers for Disease Control and Prevention recommends that travelers who must travel to the UK should be fully vaccinated because cases on both sides of the Atlantic are on the rise.
On July 19, local time, French government spokesman Adal said that France has now entered the fourth round of the epidemic, and the spread of the new crown virus is extremely rapid, this time it has risen faster than the previous three waves. At present, the delta variant virus has accounted for 80% of the infected people in France. The French government calls on the public to be vaccinated as soon as possible to deal with the rapid development of the epidemic.
Despite this, Royal Bank of Canada said that high frequency indicators show that restaurant reservations in the US on weekends are at the level before the outbreak of the new crown epidemic, while domestic flights are at the highest level since the beginning of the epidemic. The United States is the world's largest oil consumer.
Analysts believe that the short-term decline in oil prices driven by overnight panic has been excessive. In fact, the current global epidemic may indeed affect the demand in some countries and regions, but this will only slow down but will not reverse the continued upward trend of crude oil demand, so There is still demand for short-term oil prices rebounding, and there is a high probability that US crude oil will rise to the $70 line in the future. At that time, the market will once again compare the outlook for changes in global supply and demand to assess the direction of the next market trend.
UBS strategists are still optimistic about oil prices. After OPEC+ reaches an agreement to increase production, the market focus should shift from supply to increased demand. Demand appears to be strong this summer. In addition, output growth will not be static. If liquidity restrictions are restored, output Growth may be reversed.
The bank believes that the market’s response to the supply agreement is relatively mild, indicating that the increase in global crude oil supply by 2 million barrels per day before the end of the year is in line with market expectations. With the conclusion of the agreement, investors have a clearer understanding of oil supply in the short and medium term. Attention should now turn to economic reopening; preliminary data shows that oil demand will rise, especially in the United States and Europe. The suppressed demand for holiday tourism, entertainment and business activities in the coming weeks should further boost oil demand. Crude oil demand may exceed 97 million barrels/day, which is higher than the low point of 78 million barrels/day in April 2020. It is still expected that global daily demand will exceed 99 million barrels this year.
The bank pointed out that OPEC+ will hold its next meeting on September 1. If the spread of the delta new coronavirus strain triggers new liquidity restrictions and reduces oil demand, OPEC+ may suspend or even terminate its decision to increase oil supply. With declining production capacity, some countries may not be able to increase production every month. The guidance for increasing production is not static. Instead, it sends a signal to non-OPEC oil-producing countries to consider these goals when formulating their 2022 production plan.
The latest data from the CME Group crude oil futures market showed that Monday's crude oil open interest fell for the fourth consecutive day, this time down about 23,700. On the other hand, the trading volume ended its two consecutive declines, an increase of nearly 625,000 contracts.
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