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    Home > Chemicals Industry > Petrochemical News > U.S. CPI hits a 13-year high, the mid- to long-term upward trend of crude oil remains unchanged

    U.S. CPI hits a 13-year high, the mid- to long-term upward trend of crude oil remains unchanged

    • Last Update: 2021-07-20
    • Source: Internet
    • Author: User
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    The US Department of Labor announced on Thursday (June 10) that as the economy recovered from the recession triggered by the pandemic, the CPI (Consumer Price Index) accelerated in May at the fastest rate since September 2008, compared with the same period last year.
    Up 5%, higher than the 4.
    7% expected by Dow Jones; core CPI increased by 3.
    8% year-on-year, exceeding market expectations by 3.
    5%, and the growth rate hit a new high since 1992
    .
    However, from the perspective of the CPI index, the compound growth rate in May 2021 relative to May 2019 was only 2.
    5%
    .


    The main reason for this surge in inflation is the base effect and supply shortages under the epidemic
    .
    Although the US inflation data continues to rise, Fed officials believe that the current rise is due to temporary factors, which will gradually weaken over time
    .
    The analysis believes that the market’s expectations for inflation in the United States have peaked, and investors have gradually given up “gambling” with the Fed, and no longer worry about the Fed’s misjudgment of inflation risks, leading to a sharp change in policy
    .


    On the whole, crude oil may continue to produce expected fluctuations around the Iranian nuclear negotiation process in the short term.
    In the medium and long term, the resonance of the supply side and the demand side strongly supports oil prices.
    The trend of crude oil in the market outlook will remain strong, and the oil distribution is expected to rise further
    .


      01

      Favorable factors for rising oil prices The

      recovery of major economies is strong, and global energy consumption is growing rapidly.
    The

      Organization for Economic Cooperation and Development (OECD) posted data on its official website on June 10, showing that the gross domestic product (GDP) of G20 members as a whole in the first quarter of this year It has been restored to the level before the new crown epidemic, but there is still a huge gap in the progress of GDP recovery among various economies
    .
    According to OECD statistics, the GDP of G20 members in the first quarter of this year increased by 3.
    4% year-on-year, while the fourth quarter of last year recorded a 0.
    7% contraction
    .
    China achieved the strongest year-on-year growth in the first quarter of this year, reaching 18.
    3%
    .


      In May, global crude oil and liquid fuel consumption was 96.
    2 million barrels/day, an increase of 11.
    9 million barrels/day from May 2020, but a decrease of 3.
    7 million barrels/day from May 2019
    .
    It is estimated that the average global oil and liquid fuel consumption in 2021 will be 97.
    7 million barrels per day
    .
    The U.
    S.
    Energy Information Administration (EIA) predicted on Tuesday that US fuel consumption this year will increase by 1.
    49 million barrels per day, higher than the previous forecast of 1.
    39 million barrels per day
    .


      The unblocking of Europe, the high temperature in the Middle East, and the surge in fuel demand.


      With the lifting of travel restrictions in Europe, the increase in vaccination rates and the reopening of the economy, the strong prospect of fuel demand growth has boosted the market
    .
    There are signs of stability that with the relaxation of travel restrictions, oil consumption in the United Kingdom and other European countries is closely following the improvement in travel in the United States, and traffic congestion in 15 European cities has reached the highest level since the outbreak
    .


      Recently, as the temperature in the Middle East has soared, the local government will use more oil and natural gas to generate electricity to cool residents' homes, or further increase fuel prices
    .
    The weather in Saudi Arabia, the UAE, and Kuwait is hotter than normal, and they all rely on burning crude oil and fuel oil to maintain power plants
    .
    This week, OPEC member Kuwait’s electricity consumption exceeded its previous peak, and the early arrival of hot weather has increased the use of air-conditioning
    .


      OPEC is optimistic about the recovery of global crude oil demand in the second half of the year.


      OPEC (OPEC) recently stated that: under the leadership of the United States and China, the global economic recovery and the resulting oil demand are expected to gain momentum in the second half of the year
    .
    OPEC expects the world economic growth rate to be 5.
    5% in 2021, and the impact of the epidemic will be basically contained before the beginning of the second half of the year
    .
    It is predicted that oil demand will increase by 5.
    95 million barrels per day this year, an increase of 6.
    6%, and the forecast remains unchanged for the second consecutive month
    .


      As OPEC and its allies have reduced supplies, oil prices have risen by about 39% this year.
    Before the report was released, oil prices were above US$72 per barrel
    .
    At present, OPEC has resumed nearly 40% of the production that was suspended a year ago due to the epidemic, and will meet on July 1 to consider restoring the remaining production
    .


      US EIA crude oil and API refined oil inventories fell more than expected.


      The US commercial crude oil inventories excluding strategic reserves for the week ending June 2 announced on June 9 decreased by 5.
    241 million barrels to 474 million barrels, a decrease of 1.
    1%, and an unexpected decrease of 3.
    5 million.
    Bucket
    .
    As can be seen from the EIA report, US crude oil inventories are showing a positive phenomenon, recording 11 consecutive weeks of decline, the most consecutive weeks of decline since 2017, and overall crude oil inventories are currently below the 5-year average
    .


      The American Petroleum Institute (API) report shows that as of the week of June 4, crude oil inventories decreased by 2.
    1 million barrels, gasoline inventories increased by 2.
    4 million barrels, and refined oil inventories increased by 3.
    75 million barrels
    .
    After the data was released, U.
    S.
    oil fell by $0.
    21
    .


      02

      Unfavorable factors for rising oil prices.


      Iran’s nuclear agreement negotiations have become short-term volatile variables.


      The market is currently paying attention to the Iranian nuclear agreement talks to be held again in the day.
    Oil production will be fully restored within a month, and most oil production will be restored within one month after the sanctions are lifted
    .
    Although the uncertainty of the Iran nuclear agreement is still large, under the key market window, the market's willingness to profit from the continuously rising crude oil has increased
    .


      Oil investors believe that as Iran and Western countries make progress in the negotiations on a nuclear agreement, sanctions on Iran’s exports will be lifted and oil supply will increase this year.

    .
    On Tuesday, US Secretary of State Blinken predicted that even if Iran resumes compliance with the Iran nuclear agreement, hundreds of US sanctions against Iran will continue to be implemented
    .
    To some extent, the restoration process of Iranian crude oil supply only affects the rhythm of rising oil prices
    .


      The U.
    S.
    lifts sanctions

      on some executives in Iran’s oil industry.
    The U.
    S.
    Treasury Department on Thursday lifted sanctions on a dozen former executives of Iran’s energy companies.
    These executives came from a number of companies including National Iranian Oil Co.
    , a state-owned Iranian oil and gas company.
    The reason for the previous sanctions was the participation in shipping and trading of petrochemical products in October last year
    .
    US officials said that this signal shows that the Biden administration promises that if the Iranian government changes its behavior, the pressure on large-scale sanctions on Iran will be eased
    .


      After the news, the U.
    S.
    WTI crude oil futures plunged more than $1 in a short-term, and fell from above 70.
    20 U.
    S.
    dollars to below 69 U.
    S.
    dollars in just ten minutes.
    It quickly gave up the intraday gain of nearly 0.
    4% and turned down.
    The lowest fell below 68.
    70 U.
    S.
    dollars, a refresh of 6.
    On 8th, Japan’s intraday low was at its lowest level since Tuesday, with an intraday drop of more than 1.
    8%
    .


      EIA refined oil inventories rose sharply

      The data released by the U.
    S.
    Energy Information Administration (EIA) on Wednesday showed that refined oil inventories rose sharply.
    Among them, EIA gasoline inventories actually announced an increase of 7.
    046 million barrels, far exceeding expectations for an increase of 1.
    2 million barrels, an increase of 4 in 2020.
    The largest since the week of March 3; EIA refined oil inventories actually announced an increase of 4.
    412 million barrels, which is expected to increase by 1.
    8 million barrels, the largest increase since the week of January 8, 2021
    .


      The increase in refined oil inventories indicates that fuel demand is less than expected, and will cast a shadow on the prospect of a strong rebound in demand during the summer driving season
    .

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