News summary

The crude oil market experienced a decline in early tradingcryptothegame, EIA data showed that gasoline inventories decreased more than expected, which may provide support for oil prices. The OPEC+ June meeting will discuss a production reduction agreement. Citigroup research predicts that the average price of Brent crude oil in the second quarter may reach US$86/barrel, and will decline in the future. The Fed's hawkish stance puts pressure on commodity markets.

Newsletter text

[The crude oil market witnessed a downward revision of demand expectations, and gasoline inventories fell more than expected]

On Thursday, the main crude oil contract, 2407, closed down 1.1%.cryptothegame.39%, falling to 602.5 points. Although the growth rate of global crude oil demand has been lowered by the three major institutions and market expectations have become cautious, the U.S. EIA inventory report showed that gasoline inventories fell by 945,000 barrels, a more than expected decrease of 729,000 barrels.

As the peak season for overseas gasoline consumption approaches, the increase in apparent demand for refined oil products in the United States and the improvement of refined oil cracking spreads may provide some support for oil prices.

Russian Deputy Prime Minister Novak recently announced that OPEC+ member states will discuss the current situation of the oil market at their June meeting. The Russian Ministry of Energy also revealed that although the output in April exceeded the quota, a compensation plan would be submitted. Citi Research's forecast for OPEC+ to maintain production cuts in the third quarter and its forecast that the average price of Brent crude oil will gradually decline after reaching US$86/barrel in the second quarter of 2024 have had an impact on the market.

At the macro level, the minutes of the Federal Reserve's May monetary policy meeting showed that officials expressed concern about poor inflation data and hinted that they would observe the data for a longer period of time to have more confidence in lowering inflation to the target. The overall statement was biased towards hawks, which reduced the market's expectation of the Federal Reserve to cut interest rates has put pressure on commodity markets such as crude oil.

Currently, the crude oil market is focusing on the OPEC meeting on June 1, when it will discuss whether to extend the current production reduction agreement. Prior to this, the market expected oil prices to remain volatile and weak. However, as the peak season for gasoline consumption approaches, the room for oil prices to fall may be limited. Geopolitical risks such as the situation in Russia and Ukraine and the Palestinian-Israeli conflict also deserve close attention.