After a wave of sustained rise, international oil prices returned to their declining trend in the fourth quarter of last year. Since May, affected by global hedging sentiment and inventory supply, international oil prices have plunged into a new round of decline, and the two major international oil futures contracts have stepped out of the first lunar eclipse of this year.
“The contraction of crude oil production and the abolition of Iranian oil import exemption by the United States are the supporting factors for the rebound in oil prices in the first quarter, but the oil price has fallen sharply in the near future due to the basically stable contraction of crude oil production to May.” Qiu Xuan, a senior engineer at the Marketing Institute of China National Petroleum Planning Institute, told Shanghai Stock Exchange.
As of Friday’s close, WTI crude oil main contract closed at $53.40 a barrel, down more than 5% in the day, 8.9% in the week and 16.5% in the month. Brent crude oil main contract closed at $61.76 a barrel, down more than 5% on the day, 10% on the week and 14.3% on the month.
As a representative of risky assets, crude oil prices have fallen into the same downturn as global stock markets recently. Ole Hansen, head of global commodity strategy at Saab Bank in Denmark, said the negative impact of the global economy had raised concerns among investors that growth in crude oil demand would slow down and put pressure on oil prices.
Several international agencies have begun to lower their global economic growth expectations. In early April, the IMF again lowered its global economic growth forecast for 2019 to 3.3%, the slowest pace since 2009, compared with 3.9% a year ago.
The Organisation for Economic Cooperation and Development (OECD) further lowered its global economic growth forecast for this year to 3.2% in May, 0.7 percentage points lower than last May’s forecast.
“Macroeconomic data are deteriorating, as can be seen from weak oil demand.” The United States Bank of America said in a report.
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Later, Qiu Xuan believes that oil prices are still highly uncertain and likely to maintain a wide range of oscillations.
Christopher Lewis, an analyst at FX Empire, an overseas technology arm, believes that oil prices now seem to be looking for a bottom and may be lower for some time to come.
U.S. crude oil inventories are still operating at high levels, which exacerbates the bearish sentiment that pervades the market. U.S. commercial crude oil stocks fell by about 300,000 barrels in the week ending May 24, according to data released by the U.S. Energy Information Agency on May 30, but the decline was far below market expectations, with crude oil production increasing by 100,000 barrels a day to 12.3 million barrels.
However, lower oil prices are good news for big energy importers such as China. In Qiu Xuan’s view, the fall in international oil prices will help China reduce import costs.
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According to the latest data released by the General Administration of Customs, China imported 165 million tons of crude oil from January to April this year, an increase of 8.9% over the same period last year. The average import price was 3145.5 yuan per ton, an increase of 0.9%.
As international oil prices continue to fall, the market expects domestic refined oil products to come down. According to Longzhong Information, the overall change rate of crude oil as of May 31 is -4.12%. It is estimated that the corresponding reduction will be 190 yuan/ton. A new round of price adjustment window for refined oil will be opened at 24:00 on June 11.
“Whether the OPEC Conference in June will continue to implement the cut-off agreement and whether to expand the cut-off is still unknown. In addition, the repaired joint of the U.S. crude oil pipeline is another factor affecting oil prices. Qiu Xuan said that if OPEC announced a cut in production before the completion of the U.S. crude oil pipeline, it would be good for oil prices, and vice versa, it would be bad for oil prices to rise.
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