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Why has the international oil price "turned down"? "Weak demand" + "suspicion" of production cuts?

Abstract:On July 7, according to the market trend chart, today, whether it is US crude oil or Brent crude oil, are falling slightly. So, what is the reason for the international oil price "turning down"?

On July 7th, according to the market trend chart, today, whether it is US crude oil or Brent crude oil, are falling slightly. So, what is the reason for the international oil price "turning down"?


Today, U.S. crude oil "opened higher and lowered" and advanced towards $40/barrel, which meant that it once again fell below, and the trend of Brent crude oil is "just like American crude oil" and is also being adjusted downward.

The reason for the decline in national oil prices is essentially inseparable from changes in "demand" and "supply". According to reports, after the outbreak of the second outbreak in the United States, it continued to spread and showed an increasing trend.

The data shows that as of 9:00 on July 7, a total of 3040503 cases of new coronavirus pneumonia were diagnosed, 1312613 cases were cured, 132978 cases were died, and 1594912 cases are currently diagnosed.

At present, due to the surge in confirmed cases of new coronary pneumonia in the United States, several southern and western states have begun to implement restrictive measures again. Regions like Arizona, Florida, and Texas have announced a moratorium on restart plans.

Some US states suspended their economic restart plans and continued to “block”, which would cause the international crude oil demand to “decline”. Coupled with the fact that it is summer, the "economic restart" would stimulate the US tourism industry, thereby increasing the "demand" of crude oil.


However, some residents in the United States are now "immobilized" and once again "blocked", causing crude oil demand to once again fall into a "weak" state in March, thereby causing international oil prices to "stagnate" or fall.

Now, in addition to the weak US crude oil "demand", another reason for the decline in international oil prices is mainly due to doubts about whether OPEC+ will continue to reduce production, thereby suppressing international oil prices.

According to reports, this month, Saudi Arabia, the UAE and Kuwait have announced that they will not cut production. At the same time, Saudi Arabia and Kuwait restarted the neutral oil field. Their move caused the market to doubt OPEC+'s reduction in crude oil.

The so-called neutral oil field is located at the junction of Saudi Arabia and Kuwait and jointly developed by them. Before July, Saudi Arabia, UAE and Kuwait, in order to boost international oil prices, they "cut production" on the basis of OPEC+ production cut agreement, which pushed up international oil prices.

Now, they no longer reduce their production, which may lead OPEC+ countries to increase their production. This will increase the supply of crude oil on the market, which will cause the international oil price to fall.

According to this logic, then, in the future, is the international oil price going to fall? If the international oil price falls, it may or may not. Now, all kinds of good and bad news on the market are intertwined.


Just now, we talked about bad news. Now, we are looking at the news that supports international oil prices. Recently, China and the United States released the June manufacturing purchasing managers' index, which is better than market expectations, which will boost international oil prices.

The data shows that China's June Caixin manufacturing PMI was 51.2, the expected value was 50.5, and the previous value was 50.7; while the United States June June Markit manufacturing PMI final value was 49.8, the expected value was 49.6, and the previous value was 49.6.

From the data point of view, although the US Manufacturing Purchasing Managers Index did not rise above the 50 dry glory line in June, compared with the previous month, there has been a "rising", which will also support the decline in international oil prices.

Therefore, in the future, whether international oil prices will rise or fall depends on which side of the market's actual influence will fall. Today, the international oil price fell slightly, it seems that the "weak" demand + production cut "suspicion" played a stronger role. What do you think?