Vang SJC

Yesterday oil prices retreated despite US crude inventories fell 4.3 million barrels last week, more than expected (down 2 million) to 461.4 million barrels.

WTI decreased 2.8% to $51.59 in the range of $51.50-$53.80.

WTI is currently trading at $51.80 at 1:31 pm GMT+7, up 0.3% compared with the opening price ($51.62).

Oil prices may increase because:

  • According to Reuters, China consumed 10:56 mbpd in June, up 2.3% compared with May (10.32 mbpd). Additionally refinery throughout in June reached 10.55 mbpd, up 2% compared to May. The International Energy Agency (IEA) recently predicted that China’s oil demand will increase by 3.2% this year.
  • Iranian nuclear deal may not threaten the market for now cause it takes 60 days for U.S. Congress to review and pass on. Also, in the 100 pages of the agreement, the embargo will not be lifted until the IAEA confirmed that Iran has complied with the measures relating to the nuclear program (expected in January 2016).
  • Iranian floating oil storage is thought to contain over 20 million barrels. But from the viewpoint of Iran, this country will not rush pouring these oil into the market with cheap price right now. A waiting until next year is reasonable when global demand may be strong enough to welcome Iran back.
  • “If production from non-OPEC slows down as expected and at same time demand continues growing next year, assuming that Iraq doesn’t increase big and Libya is not going to come back, then the market will absorb the Iranian oil,” a senior Gulf OPEC delegate told Reuters. (Reuters)
  • Asia are ready to buy Iranian oil with competitive prices once they know when the embargo is lifted. India, China, South Korea, and Japan has showed interest in Iranian oil. In May, Asian oil imports from Iran reached 1.2 mbpd, the highest level in this year. However, Iran’s oil is not cheap and it still has to compete with other rivals.

Oil prices may fall because:

According to figures from the National Bureau of Statistics, China crude output rose 3.2% in June to 4.41 mbpd. China Automobile Association has cut its forecast auto sales to 3% with influence from the stock market, oil demand of China is likely to level off in the coming months, while the supply remains over.

Tonight, the US will publish the unemployment claims (7:30 GMT+7) last week and Philly manufacturing index of June (9:00 GMT+7). Good data may support for the dollar, oil prices will probably create some unusual downward phase.

Forecast: Oil will likely fluctuate in the range of $51-53, may rise to $53.85, after reducing to about $51.85.

Ban Mai