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International crude oil prices continue to rise

International crude oil prices continue to rise

(Summary description) After experiencing a three-week increase, international crude oil prices have returned to a downward trend this week

International crude oil prices continue to rise

(Summary description) After experiencing a three-week increase, international crude oil prices have returned to a downward trend this week


  After experiencing a three-week increase, international crude oil prices have returned to a downward trend this week, all falling by more than 2.5%. Market analysts said that the main reason for the decline in oil prices was the surge in US fuel inventories and concerns about a slowing global economy that weighed on the outlook for demand, but the outlook remains bullish. The political turmoil in Venezuela and Russia ’s commitment to accelerate production cuts may lead to tighter crude supplies To provide support for the subsequent trend of international oil prices, so the future direction of international crude oil is still unclear.


  As of the close of January 28, the price of light crude oil futures for March delivery on the New York Mercantile Exchange fell by $ 1.7 to close at $ 51.99 per barrel, a decrease of 3.17%. London Brent crude for March delivery fell by $ 1.71 to close at $ 59.93 per barrel, a drop of 2.77%.


  Slowing economic growth weighs on outlook for crude oil demand


  The general slowdown in global economic growth has become a long-term factor that has restrained oil price increases this year. The IMF lowered its global forecasted growth rate by 0.2 percentage points to 3.5% in 2019 and said that "greater downside correction risks are rising." In its monthly report released last week, OPEC lowered the average global demand for OPEC oil in 2019 by about 900,000 barrels per day. It is expected that the growth of non-OPEC supply will be about 800,000 barrels per day higher than the increase in global demand. The OPEC report states that oil prices are under pressure from oversupply and possible deterioration in demand. Against the backdrop of high levels of global economic uncertainty and weak refining margins, market concerns over global supply and deteriorating oil demand have put pressure on oil prices.


Daily FX (DailyFX) senior currency strategist Spivak said in a research report that the crude oil market is currently focusing on global growth concerns and many factors have begun to weigh on oil prices. US manufacturing PMI data for January is likely to increase market anxiety. Concerns over US trade risks with China, slowing economic growth in Europe and more fragile emerging economies have weakened confidence in the oil market.


  U.S. crude oil production continues to soar


  Since 2018, U.S. crude oil production has continued to maintain a steady and rapid growth momentum, and the production record has been continuously refreshed. By the end of 2018, U.S. crude oil production had climbed to 11.7 million barrels per day, of which shale oil contributed most of the increase in production.In 2018, the Permian Basin alone increased the output of 730,000 shale oil. Barrels / day. This growth momentum is expected to continue this year, and Baker Hughes Energy Services said in its weekly report on January 25 that the output of US energy companies may increase further. As of January 25, American Energy Corporation increased 10 drilling platforms to 862. This is the first time that US Energy has increased drilling in 2019.


At present, the United States has surpassed Russia and Saudi Arabia to become the world's largest crude oil producer. According to the latest data released by the American Energy Information Association (EIA), as of January 18, despite refinery production cuts, U.S. gasoline inventories jumped by 4.05 million barrels to a record high of 259.6 million barrels, rising for the eighth consecutive week; Weekly crude oil inventories also increased sharply by 7.97 million barrels. In a report, Barclays Bank of England said that the record US oil output may make up for the shortfall caused by the short-term disruption of oil supply in some countries due to possible US sanctions and put pressure on international crude oil prices. The bank lowered its average Brent crude oil price forecast for 2019 to $ 70 from $ 72 a barrel previously.


  U.S. sanctions escalate on Venezuela


  Venezuelan opposition leader Guaido declared his interim president on January 23, receiving support from the United States and several Latin American governments, prompting the collapse of relations between the current President Maduro and the United States. US President Trump has stated that he will continue to make full use of US economic and diplomatic forces to promote the restoration of Venezuelan democracy and end Maduro's illegal government. As Venezuela further plunges into political and economic turmoil, the United States recently hinted that it might impose sanctions on Venezuelan crude oil exports.


On January 28, Eastern Time, senior government officials such as Kudlow, director of the National Economic Council, and national security adviser Bolton attended a press conference at the White House, announcing that the United States will impose new economic sanctions on Venezuela. The U.S. Treasury Department said the sanctions order would freeze all assets of Venezuela Petroleum Corporation (PDVSA) under US jurisdiction and bar US citizens and companies from doing business with it. Bolton said at a press conference that sanctions would freeze Venezuela's $ 7 billion worth of assets and reduce the country's exports by $ 11 billion next year.


  The confrontation between the U.S. and the Venezuela has worried the market that Iran-like embargo sanctions are about to come, which has supported international crude oil prices. Although Venezuela's output has been shrinking since the outbreak of the financial crisis, it has now stabilized and maintained above 1 million barrels per day. The escalation of US sanctions now is likely to further expand Venezuelan oil production cuts. RBC European Branch said: "This year Venezuela's oil production will be reduced by another 300,000 to 500,000 barrels per day, and the escalation of punitive measures may increase production reduction by hundreds of thousands of barrels."


  Russia promises to speed up production cuts


  In addition to Venezuelan oil exports being blocked, Russia ’s commitment to speeding up production cuts has become another positive factor for the international oil market. "We are all committed to the agreement of December last year. All signs are good so far, and Russia has promised that they will accelerate the pace of production cuts," Saudi Energy Minister Al-Falih said in an interview on Monday.


On December 7, 2018, OPEC member states and several non-OPEC oil-producing countries, including Russia, reached an agreement and decided to reduce the total output by 1.2 million barrels per day from January 1 this year to curb the declining international crude oil market. However, the effect of the implementation of the production reduction agreement was not satisfactory. Falihe had previously criticized Russia for slowing production slower than expected. Russia ’s crude oil production in January fell by more than 30,000 barrels per day from October last year. Russia had promised to The monthly output is reduced by 230,000 barrels per day. The Russian side attributed this to Russia's cold winters and geological conditions that prevented it from cutting production quickly.


  This situation is currently changing. Falih said that Russia is committed to fulfilling its commitment to reduce production. "They have encountered some problems, but like last year, they will always catch up." The market will wait for Russia's recent output changes and look forward to Russia's production cuts affecting international crude oil prices. support. (From China Energy Network)

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