U.S. Oil Stepped Back And The Dollar Continued to Rebound

In the European market on Monday (April 5), U.S. crude oil futures prices fluctuated downward by more than 2% and stepped back on the $60 integer mark.

U.S. dollar index (93.0839, 0.0854, 0.09%)

Continued to rise slightly above 93, but last week OPEC and its allies agreed to gradually ease some of the production cuts between May and July. In addition, US President Biden proposed a $2 trillion infrastructure spending plan, and oil prices have limited downward space.

As of press time, the US crude oil futures price was reported at 60.40 US dollars per barrel, down 1.71%;

Brent crude oil

Futures prices reported $63.69 per barrel, down 1.49%.

OPEC+, which includes Russia and its allies, agreed to relax the daily production limits of 350,000, 350,000 and 400,000 barrels in May, June and July, respectively.

Everbright Securities believes that although OPEC+ will increase production by more than 1 million barrels per day in July, the increase in production still cannot meet the increase in global demand for petroleum products, and the international oil market is still in a tight balance between supply and demand. That is to say, OPEC+’s decision to increase production is not to depress oil prices, nor is it a bad news for the oil market, but because it has more optimistic expectations about global oil demand. At present, the chance of a rapid decline in oil prices is unlikely. Although there may be short-term disturbances, such as the easing of US-Iran relations, shrinking global liquidity, and short-term production increases in individual countries, the supply and demand pattern is tight in anticipation of a substantial recovery in global demand The situation will continue, and oil prices will remain at the central position of US$55-65/barrel throughout the year.

Previously, the new US government called on Saudi Arabia to maintain affordable energy for consumers. Although parts of Europe are still under lockdown, Japan can expand emergency measures as needed to curb the new wave of new coronavirus infections.

According to the agreement reached on Thursday, OPEC+ will cut production by slightly more than 6.5 million barrels per day in May, and slightly less than 7 million barrels per day in April.

Most of the increased oil supply will come from Saudi Arabia, the world’s largest oil exporter. Saudi Arabia stated that it will phase out additional voluntary production cuts by July, which will increase production by 1 million barrels per day.

The focus of investors this week is the indirect negotiations between Iran and the United States in Vienna. Iran’s Deputy Foreign Minister Araghi said on the 4th that Iran refused to “step by step” on the issue of the United States’ return to the comprehensive agreement on the Iranian nuclear issue. The plan requires the United States to lift all sanctions on Iran at one time. In an interview with the media, Araghi said that the Iranian representative will not hold any direct or indirect talks with the US representative at the Iranian nuclear agreement-related meeting scheduled to be held in Vienna, Austria on the 6th.