Abstract:On July 13, according to the market trend chart, today, whether it is Brent crude oil or U.S. crude oil, it stands firmly above $40/barrel and has not fallen.

On July 13th, according to the market trend chart, today, whether it is Brent crude oil or U.S. crude oil, it stands firmly above $40/barrel and has not fallen.

In the last Friday (July 10), US crude oil has fallen below US$40/barrel, but at the last close, US crude oil has steadily stood at US$40/barrel. So, what is the reason why international oil prices are "difficult to fall"?

Recently, there are many factors that support the "not falling" of international oil prices. Among them, there is a factor in the supply "slip" that is more prominent, which may be a reason to support the "difficult" of international oil prices!

As everyone knows, due to technological innovation, the shale oil production in the United States has increased significantly. Last year (2019), the US crude oil production has surpassed Russia and became the world's largest oil producer.

According to statistics, in 2019, the maximum supply of US crude oil exceeded 120 million barrels per day. Entering 2020, due to the impact of the new crown epidemic, the market demand for crude oil has "suddenly dropped". At the same time, international oil prices have also fallen sharply.

Due to the “decrease” in crude oil market demand and the decline in crude oil prices, the US crude oil miners have suffered a severe “loss”, which has reduced the supply of crude oil miners.

The U.S. Energy Information Administration (EIA) predicts that this year’s U.S. crude oil production will drop from a record 12.2 million barrels/day in 2019 to 11.6 million barrels/day per day, while global oil and other liquid fuel consumption will be in 2020 It fell to 92.9 million barrels per day per year. 2019 is a record 101 million barrels per day.

The "decline" of US crude oil production will support the rise of international oil prices to a certain extent. Recently, international oil prices have not fallen below US$40. Perhaps the "decrease" of US crude oil production is one of the reasons.

In addition, at present, there is a peculiar phenomenon in the United States, which may also be a reason for supporting the international oil prices not to fall. According to reports, recently, the transaction prices of used cars in the United States have continued to "rise".

The data shows that in June, the U.S. auto transaction price increased by 9% year-on-year, all of which was due to the new crown epidemic. In an international metropolis like New York, the main modes of transportation are buses, commuter trains, and subways.

At present, due to the new crown epidemic, in order to avoid close contact with being "infected", working people in some large cities in the United States have begun to change their travel methods.

According to statistics, in many large cities in the United States, public transport passenger flows have recorded a decrease of 50-75%, and have not recovered as the economy restarts.

Under the ravages of the new coronavirus, the New York subway, which was squeezed like canned sardines, became a monstrous bird, and passenger traffic dropped by 90%.

The increase in the price of used car transactions in the United States indicates that the way Americans travel in the second half of 2020 will gradually replace subways, commuter trains and buses by private cars. As the volume of US private car transactions rises, the demand for US crude oil will "substantially increase", thereby supporting international oil prices.

At the same time, Iraq further reduced production to maintain the promise of the original production reduction agreement and also supported international oil prices to varying degrees.

Starting from April this year, in order to prevent the international oil price from falling, OPEC+ member states have begun to reduce the output of crude oil supply, and Iraq has not "reduced production" for its own economy.

Under the supervision of its OPEC+ member states, Iraq decided to make up for the previously unreduced crude oil production in the future. The Iraqi National Oil Company stated that the average output in June was 3.698 million barrels/day, compared with 4.068 million barrels/day in May. As the second largest oil producer in OPEC, Iraq has agreed to reduce production to 3.592 million barrels/day after the May production cuts take effect.

The latest Platts survey shows that output in June was 3.7 million barrels per day, close to the lowest level in five years. The country has pledged to make up for excess production through additional cuts in July, August and September.

According to data from the Iraqi National Oil Company, total exports, including exports from the Kurdish region, fell 11.4% from 3.363 million barrels/day in May to 3.128 million barrels/day.

In addition, according to the OPEC+ production reduction agreement, Angola, Iraq, Kazakhstan and Nigeria pledged to further reduce quotas in July, August and September to compensate for the production reductions that did not meet the standards in May and June.

Therefore, affected by these factors, international oil prices have not fallen below $40 per barrel. In the future, if these factors continue to deepen, then international oil prices may have to rise. What do you think?