Aftermarket views

Oil prices on Thursday night once again reversed the weak rebound in the day to recover from the decline. After domestic SC crude oil stopped at 2:30 a.m., European and American oil prices fell from intraday highs. Recently, SC crude oil performed better than European and American oil prices, leading the upward trend. Apart from the sharp rise in freight rates before the Spring Festival, this performance also shows that investors are still expecting post-holiday demand to start as extreme weather nears the end. Although oil prices have fluctuated within a narrow range of about 2 US dollars over the past 10 trading days, and the long and short sides are in a compatible phase under key resistance. On the one hand, the current resistance is a consensus. The performance of the refined oil market is currently dragging down crude oil performance, but there are also expectations for the next demand-side startup market. Everyone is waiting for a guiding signal that can give the future direction of oil prices.

The EIA report shows that the crude oil inventory has accumulated 3,514,000 barrels. Although the increase is lower than market expectations, it is also far lower than the data previously released by the API. Oil prices rose after the news was announced. Yemen's Houthis propaganda launched attacks on Israeli and American and British targets, causing geographical factors to continue to disrupt the market. However, as can be seen from the performance of oil prices falling back from a high level in the early morning, oil prices still lack the energy to break through key resistance levels. Looking at the recovery on the demand side at present, in particular, the performance of the Chinese and US markets on the demand side will play a key role in oil prices in the next step. Oil prices will maintain a volatile mentality until the target population changes, keep an eye on the pace, and participate carefully.

Daily news

[1] WTI's main crude oil futures closed up 0.7 US dollars, or 0.9%, to 78.61 US dollars/barrel; Brent crude oil futures closed up 0.59 US dollars, or 0.72%, to 82.7 US dollars/barrel; and INE crude oil futures closed up 1.56% to 607.3 yuan.

[2] The US dollar index fell 0.04% to 103.94; the HKEx dollar fell 0.03% against the RMB to 7.1826; the US 10-year treasury bond fell 0% to 109.63; and the Dow Jones Industrial Index rose 1.18% to 39069.11.

Recent highlights

[1] EIA Report: Commercial crude oil inventories excluding strategic reserves increased by 3.514 million barrels to 443 million barrels during the week of February 16, an increase of 0.8%. Commercial crude oil inventories, excluding strategic reserves, increased by 3.514 million barrels to 443 million barrels, an increase of 0.8%. Cushing's inventory increased by 740,000 barrels, and gasoline inventories decreased by 29.4 barrels, which is expected to decrease by 2.11 million barrels; refined oil inventories decreased by 4.09 million barrels, which is expected to decrease by 1,739,000 barrels.

EIA Report: US domestic crude oil production remained unchanged at 13.3 million b/d for the week of February 16. The average four-week supply of U.S. crude oil products was 19.630 million b/d, down 2.05% from the same period last year. In the week of February 16, the US imported 6.654 million b/d of commercial crude oil, excluding strategic reserves, an increase of 184,000 b/d over the previous week. U.S. crude oil exports increased by 618,000 b/d to 4.965,000 b/d in the week of February 16.

The US EIA strategic oil reserve inventory for the week ending February 16 was the highest since the week of May 12, 2023. The US commercial crude oil inventory for the week ending February 16, when strategic reserves were removed, was the highest since the week of December 15, 2023. The decline in US refined oil stocks for the week ending February 16 was the biggest since the week of May 5, 2023.

[2] According to the latest monthly report of Ruizide, market fundamentals are expected to point to upward pressure on oil prices. This may become a reality in the next few weeks, and will further intensify in the second half of 2024 as demand remains strong. Oil supply was constrained by OPEC+ production cuts and a sharp slowdown in US crude oil production growth. The macroeconomic situation, China's economic outlook, and the situation in the Middle East are the main sources of risk predicted this year.

At the same time, Wisdom expects the balance between supply and demand in the crude oil market to relax in 2025, which should increase downward pressure on prices. Despite improving macroeconomic conditions, demand growth remains strong. However, the gradual increase in OPEC+ production, and the still strong growth in oil production in non-OPEC+ countries, has restored oversupply in the liquid market.

[3] According to market sources and transportation documents, the Venezuelan state-owned oil company PDVSA plans to receive 1.73 million barrels of Russian Ural crude oil in the next few days, some of which will be supplied to domestic refineries. Venezuela received a ship of Russian-made diesel last month, which means the country has resumed importing Russian fuel