baccaratset| Oil prices closed up and ended four consecutive losses, and changes in cross-regional crude oil market positions showed major changes.

Energy research and development center

After many days of falling oil pricesBaccaratsetFinally closed the positive line on Friday, although the weekly decline in oil prices is not large, but the whole process can be seen that market sentiment is relatively depressed, especially the performance that rebounded for many days without success and closed down, which has a significant impact on market confidence. Behind the struggle in oil prices is the recent weak spot performance in the crude oil market, especially last week when a large amount of light and sweet crude oil in the North Sea led the market lower and affected investors' judgment. However, we also saw that the intraday trend of oil prices last week was almost always a rebound and setback, not a continuous unilateral decline throughout the day, which is different from the decline in oil prices in early May. The recent decline in oil prices is more likely to reflect the lack of market confidence. Under the background of few bright spots in the crude oil market, the monthly difference structure is fully reflected, and the monthly difference structure of WTI crude oil is relatively stable. While Shanghai crude oil futures are trapped by the weak performance of the domestic oil products market, Brent crude oil is suppressed by the North Sea spot market, and its monthly difference structure is weak. However, the fact that oil prices can finally rise and stave off the decline on Friday will give the market a glimmer of respite. In the following time window, most of the market's attention will be shifted to the final decision of the OPEC + ministerial meeting, which will have a key impact on investors' expectations for the future of oil prices.

Recent weak supply and demand performance has caused Brent crude's premium to Dubai to fall to its lowest level since December. While investors are worried about the future of oil prices, they are increasingly concerned about the progress of OPEC + June ministerial meeting. According to the latest statement on OPEC's website, the organization will meet on June 2 to formulate policies for the second half of this year. One day later than originally planned. The meeting will discuss oil production online instead of holding offline meetings as originally planned. The poor health of King Salman bin Abdulaziz of Saudi Arabia and the death of Iranian President Ibrahim Lehi may have been the reason for the decision, according to people familiar with the matter. This marks another departure from physical meetings for OPEC, which has held online meetings almost all the time during the outbreak and has held only two face-to-face meetings at its headquarters in Vienna since 2020. It is widely expected that the group will extend current supply restrictions to avoid oversupply and support crude oil prices.

In the cooperation over the past few years, OPEC + core members have overcome various difficulties caused by Angola's dissatisfaction with the reduction of its production and the UAE's raising its production benchmark, at the expense of Saudi Arabia's initiative to cut production by 1 million barrels, so that other core oil-producing countries can unite to push forward the joint production reduction. After the current production reduction action was rereached in November last year, the production reduction time has been extended several times this year to June this year, and the OPEC + ministerial meeting in June will determine the supply quota for the rest of 2024. Some analysts believe that the transfer of the meeting online is the "clearest sign" of the extension of existing quotas.

Earlier, it was reported that OPEC + was still reviewing the production capacity of its member countries while deciding whether to extend the production cuts. The results of the review may affect the respective goals of countries in 2025. So far, the process has involved difficult negotiations with external consultants appointed to evaluate the matter. Since the recent extension of production reduction cooperation measures was announced by individual countries rather than OPEC +, it has been widely suspected at the implementation level, including Iraq, Kazakhstan and other production levels that have not been voluntarily reduced. Russia also admitted that excess production was caused by technical reasons in April and would make a compensation plan to meet the requirements of voluntary production reduction. The position of the United Arab Emirates was so public that its state giant Abu Dhabi National Oil Company announced that it had a production capacity of 4.85 million barrels a day-much higher than OPEC's latest estimate. The United Arab Emirates is expected to achieve its full oil production target more than a year ahead of schedule. ADNOC, the national oil company of Abu Dhabi, the United Arab Emirates, could reach its target of 5 million barrels a day by the end of next year or early 2026, earlier than the company's 2027 target, according to people familiar with the matter. The increase in capacity could be a source of tension as OPEC and its allies review new production quotas later this year. The United Arab Emirates said this month that its capacity had increased from last year's levels and had been eager to use some of its spare capacity. The UAE has disagreed with Saudi Arabia several times on this issue, and the UAE currently has a capacity of about 2/3 of its capacity. In addition, Russian Deputy Prime Minister Nowak said on Friday that Russia does not intend to cut oil production and refining, suspended the fuel export ban in order to remove excess stocks, and believes that the fuel export ban is an effective tool and will be used in the future to ensure domestic supply. Earlier, the Iraqi Oil Minister also announced that Iraq would not extend the production cuts, although it soon corrected that it would comply with the final decision of the OPEC + meeting. Iran, which does not undertake the task of reducing production, also reported on Sunday that Iran's Tasneem news agency said Iran had approved a plan to increase oil production to 4 million barrels per day. Judging from the current position of the core member states, the final negotiations at this meeting are still facing greater challenges, and whether the Saudi production reduction alliance with Saudi Arabia as the core can overcome various difficulties. OPEC + June ministerial meeting will be the most important concern of the crude oil market in the near future.

The United States will celebrate Memorial Day/Spring Bank Holiday next week, and the West will usher in the traditional peak season for gasoline consumption. From the latest weekly data from the EIA, it can be seen that gasoline consumption in the U.S. market has rebounded significantly in the past two weeks. The U.S. Department of Energy U.S. gasoline futures fell continuously after the Energy Department announced on May 21 that it would sell 1 million barrels of its Northeast Gasoline Supply Reserve, saying the move was timed to help lower gasoline prices during the summer driving season. The timing and structure of the tender have been carefully designed to maximize the impact on gasoline prices and help reduce gasoline prices for Americans when they hit the road this summer. It is reported that the sale is planned to take place from storage locations in New Jersey and Maine and will be distributed in increments of 100,000 barrels each time. The U.S. Department of Energy said the approach would ensure that gasoline would flow into local retailers by July 4 and be sold at competitive prices. The arrival of the driving season in the United States has boosted gasoline demand. In contrast, the recent sluggish demand in the Chinese market has affected domestic investors 'expectations. It can be seen that domestic oil prices performed weaker than European and American markets last week. However, last week, China's crude oil processing volume also ended its two-month decline and began to rebound. The operating rates of local refineries and main refineries have rebounded, and China's crude oil demand is expected to rebound.

In the past period of time, the crude oil market has shown differences in strength. U.S. WTI crude oil is relatively the strongest, while Brent crude oil and Shanghai SC crude oil perform weakly. This divergence of strength and weakness is very obvious from the divergence of funds in the position structure. The latest position report shows that crude oil speculators increased their net long positions in WTI by 39,768 to 140,087 lots in the week ended May 21. On the other hand, the net long position of the Brent Crude Oil Fund on the Intercontinental Exchange was significantly reduced from 67248 lots to 146250 lots. On the one hand, the United States is trying to continue to cool down the oil market and control oil prices to relieve inflationary pressures. On the other hand, OPEC +'s determination to stabilize the oil market, which is facing many challenges against the background of gradually weakening oil prices, will become the focus of market attention in the coming period. Although geopolitical factors are gradually withdrawing from their impact on oil prices, the influencing factors in the crude oil market are still facing a complex game situation, and investors will pay close attention to the interpretation of the situation. Oil prices are expected to fluctuate and rebound mainly next week before OPEC + makes a decision on output in the second half of the year. Pay attention to the rhythm and control risks.

The content was originally created by Haitong Futures Energy R & D Center