EIA stocks make the oil market bulls happy, OPEC monthly report is expected to send good news

Huitong.com May 11th - Thursday (May 11th) Asian market, the oil price fluctuated within a narrow range. WTI crude oil futures trading in the June near $47.44 / barrel, an increase of about 0.23%; Brent crude July futures trading at $ 50.31 / barrel, an increase of about 0.18%. Both EIA crude oil inventories and API crude oil inventories recorded a sharp drop, and the market's expected increase in OPEC's extended production agreement boosted overnight oil prices by more than 2%, but the US dollar stabilized or restricted oil price upside. Investors need to pay close attention to the upcoming OPEC monthly report.

On Wednesday (May 10), US WTI June crude oil futures electronic trading prices closed up 1.14 US dollars, or 2.47%, to 47.34 US dollars / barrel; ICE Brent July crude oil futures electronic disk prices closed up 1.29 US dollars, or 2.63%, Reported at $50.28 per barrel. Respected by US crude oil inventories recorded the largest weekly decline in the year, and countries such as Iraq and Algeria joined Saudi Arabia to support the extension of the OPEC production reduction agreement.

(The picture above shows the US contract price of the June contract price of NYMEX crude oil futures)

(The picture above shows the ICE Brent crude oil futures July contract price K line chart)

★ The call to support the extension of the production reduction agreement is getting stronger and stronger

Algerian oil captain said on Wednesday that Algeria and Iraq support the extension of the production reduction agreement. According to Huitong.com, Saudi Energy Minister Khalidal-Falih said on Monday (May 8th) Beijing time that the oil market is returning to equilibrium after years of oversupply. However, he still expects that the OPEC-led production reduction agreement will be extended until the end of 2017. Subsequently, the Russian Energy Minister said in a statement on Monday that Russia is very supportive of Saudi Arabia’s efforts to balance the global oil market. And believe that so far, joint production cuts are very effective.

In addition, UAE Energy Minister Beijing time on Wednesday said that OPEC will evaluate "multiple programs" at the next meeting. If the major oil producers support the extension of the production reduction agreement, the UAE will also support it. The implementation of the production reduction agreement is very good and optimistic about the next meeting.

★ EIA crude oil inventory report confirms the trend of API crude oil stocks falling

According to data released by the US Energy Information Administration (EIA) at 22:30 on Wednesday, the US EIA crude oil inventories decreased by 5.247 million barrels in the week ended May 5, which is expected to be reduced by 1,983,500 barrels. Refined oil inventories decreased by 1.587 million barrels, which is expected to decrease by 624,500 barrels. Gasoline inventories fell by 150,000 barrels, which is expected to increase by 65,400 barrels. Cushing crude oil inventories fell by 438,000 barrels, which is expected to decrease by 419,000 barrels. The refinery equipment utilization rate is 91.5%, which is expected to be 93.39%. In addition to the strategic reserve of commercial crude oil inventories decreased by 5.247 million barrels to 522.5 million barrels, a decrease of 1%, after the market was expected to decline by 1,983,500 barrels. In addition to strategic reserves, commercial crude oil imported 7.62 million barrels per day last week, a decrease of 644,000 barrels per day from the previous week. US domestic crude oil production increased for 12 consecutive weeks and continued to remain above the 9 million barrels per day mark, with production rising to 9.314 million barrels per day.

According to FX678's previous report, the US Petroleum Institute (API) data released at 04:30 on Wednesday, Beijing time, showed that the US crude oil inventories fell by 5.79 million barrels in the week of May 5, which is expected to be reduced by 1.8 million barrels.

Well-known zero-hedged commented that the API crude oil inventories announced on Wednesday morning in Beijing unexpectedly fell by 5.789 million barrels, the largest since December last year, while the EIA crude oil inventory data confirmed the API data. EIA crude oil, gasoline, refined oil and Cushing crude oil inventories all recorded declines, of which EIA crude oil inventories fell the largest since 2016. In addition, it is worth noting that US oil production rose again, further approaching the peak of 9.6 million barrels per day in July 2015.

★ North American shale oil producer plans to increase 2017 budget to $84 billion

Analysts at Barclays Group BA rclaysPlc said that oil prices had rebounded since OPEC reached a production cut agreement with non-OPEC oil producers. US shale oil producers have made a lot of money in this short-term rise in oil prices and have received sufficient funds. North American shale oil producers plan to increase their 2017 budget by 32% to $84 billion.

Wood Mackenzie analyst Roy Martin said that this year's North American shale oil producer plans to add $84 billion in budgetary spending, which will increase North American crude oil by 800,000 barrels this year. This figure is equivalent to OPEC and Non-OPEC oil producing countries reduced production by 44%.

★ US crude oil production is expected to hit a record high in 2018

Bloomberg expects US crude oil production to hit a record high in 2018. As OPEC and several other major oil producers discuss the extension of the crude oil production reduction agreement to next year, US crude oil production is expected to hit a record high by 2018. The US Energy Information Administration previously estimated that US crude oil production will rise to 9.96 million barrels per day by 2018, exceeding the record high of 9.94 million barrels per day in 1970.

★ Iranian crude oil production seems to have peaked

EnergyAspects' chief oil market analyst AmritaSen said at the Platts Global Crude Oil Summit in London that Iran's crude oil production "seems to have peaked." Venezuela is in a mess, crude oil production has fallen sharply, but production may not be significantly below 150 Million barrels / day. The crude oil market looks quite balanced next year, and it was quite tight in 2019.

★ Crude oil demand in the second quarter is expected to far exceed supply

The International Energy Agency (IEA), the director of the International Energy Agency (IEA), said in a speech on Wednesday that the crude oil market will gradually enter a supply shortage in the first half of this year. The demand for crude oil in the second quarter of this year will significantly exceed supply. If OPEC continues to cut production, crude oil demand will further exceed supply in the second half of this year. Global car usage may double by 2040, so it is expected that demand for crude oil will not peak until 2040.

★The dollar stabilizes or limits the upward price of oil prices

On Wednesday (May 10), the US dollar index continued to hold steady and rose slightly. Normally, a stronger dollar will weigh on the dollar-denominated oil price. A weaker dollar will support oil prices to a certain extent.

★Market expectations

Goldman Sachs Commodities Supervisor said that OPEC's compliance with the agreement is very high, and the long-term average return of crude oil prices is at $50-55/barrel. In the fourth quarter of 2017, the price of oil is expected to be $57/barrel and the price of oil is $55/barrel. OPEC may further extend the production reduction agreement. Even if OPEC does not cut production, the oil market is also in short supply. It is a good time to do more oil, due to the close supply gap. It is estimated that by July 1, the crude oil supply gap will be approximately 2 million barrels per day. The growth in demand for crude oil continues to be surprising.

EdMorse, head of commodities research at Citibank, recently said that the current oil price level cannot be said to bottom out, but he expects oil prices to jump at the end of this year. Therefore, he believes that now is a good buying opportunity.

EuGE nWeinberg, director of commodity research at Commerzbank, said that OPEC oil tyrants feel good about themselves, but the market has apparently become bored with this, because whether it is controlling production capacity or reducing inventory, OPEC feels like it will always be in the future. The statement of the situation can not withstand the test of the reality.

VitolGroup, the world's number one independent crude oil trader, said that although OPEC and its allies are seeking to extend the expiration date of the production cuts to push up oil prices, the agency believes that all efforts of these oil-producing countries may become futile. Because the increase in world crude oil demand is not as large as expected, and the rate of increase in US shale oil has exceeded expectations. As US crude oil production, which is not subject to agreement, continues to increase substantially, all previous increases in oil prices have now disappeared. Now that oil prices are picking up, in addition to OPEC's efforts to control production, the sustainable demand of major crude oil consumers such as China, India and the United States is equally important. What the market needs is a real and faster increase in demand for crude oil. Crude oil demand is now growing, but growth is still not fast enough.

Huitong.com reminds: The Organization of Petroleum Exporting Countries (OPEC) will announce the monthly crude oil market report around 18:00-20:00 on Thursday (May 11th) Beijing time. Investors should pay close attention.

Huitong Finance Yihuitong market software shows that Beijing time at 09:49, WTI crude oil June futures reported 47.43 US dollars / barrel; Brent crude July futures reported 50.30 US dollars / barrel.