Crude oil trading reminder: inventory decline + refined oil demand rose to a record high, oil prices withstood the pullback pressure, pay attention to OPEC monthly report

During the Asian session on Thursday (February 10), U.S. oil is now trading at $90.02/ barrel; oil prices rose on Wednesday to return above the 90 mark as demand for refined products hit record highs due to crude oil inventories last week, highlighting the continued tightness in the market; intraday oil prices also need to pay attention to OPEC monthly reports.

The focus of the day is on the US January CPI data, the US initial jobless claims for the week ended February 5, and the OPEC monthly report.

Bullish factors affecting oil prices

U.S. crude inventories unexpectedly fell 4.8 million barrels

U.S. crude inventories unexpectedly fell last week as overall refined demand rose to record highs, suggesting that U.S. economic growth is exacerbating an already tight supply situation, according to data released by the U.S. government on Wednesday.

The U.S. Energy Information Administration (EIA) said crude oil inventories fell 4.8 million barrels to 410.4 million barrels in the week ended Feb. 4, the lowest level of commercial inventories since October 2018. Analysts had previously expected crude oil inventories to increase by 369,000 barrels, the survey showed.

Overall, the slightly sluggish oil demand that emerged in early January due to the Omikejong variant appears to be over. Over the past four weeks, U.S. refined product supply — the best indicator of demand — peaked at 21.9 million bpd due to strong national economic activity. Demand for distillates such as diesel in the U.S. and demand for propane and propylene has risen sharply. Gasoline supply jumped to 9.1 million bpd last week, though the four-week average was slightly below seasonal levels.

John Kilduff, a partner at Again Capital, said, "Gasoline demand has rebounded markedly; the effects of the Omikeron variant have passed and travel demand has recovered." Refineries are clearly increasing production, which is causing crude inventories to fall. ”

Refineries struggled to keep up with demand, with refinery volumes up 329,000 bpd last week and refinery capacity utilization increasing by 1.5 percentage points to 88.2 percent of total capacity, the EIA said.

U.S. gasoline inventories fell by 1.6 million barrels to 248.4 million barrels, the EIA said. Distillate inventories, including diesel and heating oil, fell by 929,000 barrels last week. Net U.S. crude oil imports fell by 1.42 million bpd, and crude inventories in Cushing, Oklahoma, decreased by 2.8 million bpd.

Louise Dickson, senior oil market analyst at Rystad Energy, said: "Rising demand is often accompanied by higher prices, but the long-awaited supply relief may be imminent, helping to narrow imbalances and cool market sentiment." ”

【Geopolitical situation supports oil prices】

Continued supply concerns due to houthi attacks in Yemen in the UAE and the build-up of Russian heavy troops near the Ukrainian border have all supported the oil market. Over the past few days, under the pretext of the so-called "Russian invasion of Ukraine," the US military has repeatedly increased its troops to Poland, while at the same time increasing its information warfare offensive, threatening the "Nord Stream-2" pipeline, which is crucial to Russian-European relations, and constantly fanning the flames for the so-called Russian "invasion" plot.

In order to prevent the situation from continuing to heat up, on the 8th, German Chancellor Scholz invited French President Macron and Polish President Duda to meet in Berlin to discuss the security situation in Ukraine. Scholz said that maintaining regional and international security is the common responsibility of the three countries. Earlier in the day, French President Emmanuel Macron said in Kiev when meeting with Ukrainian President Zelenskiy that the Minsk agreement is the only way to resolve the conflict in eastern Ukraine and achieve peace, and Russia and Ukraine have expressed their readiness to continue to implement the Minsk agreement.

[U.S. Debt Decline Helps U.S. Stocks Rise Nasdaq 100 Index Rises More Than 2%]

U.S. stocks rose faster, with the decline in U.S. Treasuries providing an upside boost to stocks that have been tug-of-war in recent weeks by expectations of monetary tightening.

The S&P 500 continued its rally on Tuesday, with tech stocks recovering about half of the ground lost this year, with large-cap stocks leading the rise in the NASDAQ 100 and Facebook's parent company Meta, which fell for four consecutive days, receiving a bottom-reading boost after the stock market had evaporated about a third of its value.

Both the S&P 500 and nasdaq 100 recorded their biggest one-day gains of the month, with U.S. 10-year yields retreating from their highest since 2019 and hitting an intraday low of 1.91 percent after a hotly sought after 10-year tenders.

Investors are oscillating between strong corporate earnings reports and fears of a pullback from stimulus measures. Of the 317 S&P 500 constituents, about 76 percent of companies exceeded expectations, a gap of nearly 6 percent. But data released later this week is expected to show U.S. inflation continuing to overheat, potentially triggering bets on a deeper fed rate hike in March.

Dennis De Busschere, founder of 22V Research, said that "unless the Fed needs to lower its financial outlook, economic data will support risk assets" and prefers cyclical stocks to defensive stocks until financial conditions are determined to tighten further, especially given that economic headwinds are weakening and corporate demand is growing.

[British Prime Minister Johnson plans to end post-epidemic quarantine regulations]

British Prime Minister Boris Johnson has said he plans to end legal requirements in England this month that require people to self-isolate after testing positive for COVID-19.

Johnson told the House of Commons on Wednesday that the move would be part of the government's "coexistence with COVID-19" strategy announced feb. 21 as long as "the current encouraging trend continues."

The five-day rule for people to self-isolate at home after infection expires on March 24, but Johnson said he expects to be able to roll those rules "a full month in advance."

The move will be welcomed by ruling Conservative MPs, who have long called on Johnson to ease COVID-19 rules as soon as possible, out of concern about individual freedoms and the impact on businesses, health services and schools.

In addition, Johnson has also been seeking to strengthen support. 10 Downing Street was accused of holding a party in violation of regulations during the epidemic, and police are also investigating it, and Johnson's handling of the matter has sparked increasing calls for his resignation.

The UK reported 66,183 new confirmed cases of COVID-19 and 314 deaths on Tuesday, with the 7-day average number of new cases down 20% in the past week.

Louise Dickson, Senior Oil Market Analyst, Rystad Energy: The oil market is on a tight rope today as fear of the Omilon strain appears to be waning in many parts of the world, encouraging countries to ease restrictions and thus boost crude oil demand. Rising demand is often accompanied by higher prices, but the long-awaited easing of supply may be imminent, which will help narrow the supply-demand imbalance and cool market sentiment.

Negative factors affecting oil prices

[ExxonMobil and Chevron announce increased oil production]

ExxonMobil and Chevron recently announced that they will boost oil production in the U.S. shale basin this year; both companies already have a huge production base, ExxonMobil will add about 85,000 barrels of oil per day to 60,000 barrels per day in 2021, Chevron plans to produce about 300,000 barrels per day, and plans to achieve about 25% increase in production in 2022; if this plan is realized, U.S. shale oil production will increase by 1.80-200,000 barrels/day.

【Global covid-19 confirmed cases exceeded 400 million】

According to the latest data from Johns Hopkins University in the United States, as of the 9th Beijing time, the global cumulative number of confirmed covid-19 cases exceeded 400 million, and many international media called it a "sad milestone". What is even more shocking is that from 300 million people diagnosed to more than 400 million, it took just over a month, mainly due to the high contagiousness of the Omiljung variant. At present, the number of confirmed covid-19 cases worldwide is still rising rapidly.

According to data from Johns Hopkins University, the United States has the highest cumulative number of confirmed and fatal cases so far, with 77025027 cumulative confirmed cases and 908262 cumulative deaths. The second most cumulative confirmed case is India, with 42339611 confirmed cases, and the third is Brazil, with 26776692 cases. The data also shows that the United States, Germany, Brazil, Russia and Turkey are the five countries with the highest number of new confirmed cases. The United States, India, Brazil, Russia and Italy are the five countries with the highest number of new deaths.

Overall, inventory data fell sharply, refined oil demand hit a record high, helping the United States oil to return to above the 90 mark; in addition, geopolitical tensions and uncertainties support oil prices, countries gradually relaxed the restrictions on the epidemic, but also boosted crude oil demand; multiple factors supported the rise in oil prices, focusing on OPEC monthly report during the day.

This article originated from Huitong Network