Concern about demand outlook and pressure from inventory growth, crude oil prices closed down

Beijing time, June 11, crude oil futures prices closed lower Monday as investors focused on market concerns about the slowdown in global economic growth and looked for clues about what OPEC and its “allies” would do next about their production cuts. Meanwhile, according to Xinhua News Agency, US President Trump said on the 7th that the United States had reached an agreement with Mexico to impose tariffs on Mexican imports into the United States indefinitely, once supporting oil prices.

West Texas Light Crude Oil (WTI) futures for July delivery on the New York Mercantile Exchange fell 73 cents to $53.26 a barrel, or 1.4%. WTI futures prices rose 0.9% in the overall trading last week, but slipped into bear market in the middle of last week.

Meanwhile, Brent crude oil futures for August delivery on the London ICE European Futures Exchange also fell $1 to close at $62.29 a barrel, a 1.6% drop.

“After Mexico promised the Trump government that it would expand its border projects to slow immigrants’entry into the United States, the United States and Mexico reached an agreement to suspend tariff increases, thus boosting the market.” Phil Flynn, senior market analyst at Price Futures Group, said. As a result, global stock markets, including major benchmark U.S. stock indexes, showed an upward trend in Monday trading, but this risk preference did not provide much support for oil prices.

In terms of economic data, according to Xinhua. com, the General Administration of Customs released data on the 10th. In the first five months of this year, the total value of China’s import and export of goods trade was 12.1 trillion yuan, an increase of 4.1% over the same period last year. Industry insiders believe that under the protectionist “adverse wind”, China’s foreign trade has developed smoothly, which is the result of China’s adherence to the expansion of opening up, and has injected more certainty into global trade. Affected by this, China’s stock market rose sharply. As of the close, the Shanghai index closed at 2852.13 points, up 0.86%, while the Shenzhen index closed at 8711.79 points, up 1.48%.

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“Last weekend, the Saudi Arabian government hinted in a statement that OPEC and its partners were about to reach an agreement to extend the existing reduction agreement beyond June. At the same time, the statement also mentioned the need to maintain the current level of production reduction. Analysts at JBC Energy, a Vienna-based energy consultancy, wrote in a research report. The report also points out that the decline in the number of crude oil drilling platforms in the United States has also supported oil prices.

Baker Hughes, a field service provider, reported on Friday that the number of crude oil drillings in the United States dropped 11 to 789 this week, the biggest one-week decline since the week ended April 26. The report also points out that the number of crude oil drillings in the United States has declined in four weeks, the lowest level since February 2018. The data from Beckhughes can provide clues to future U.S. crude oil production. The decline in the number of drilling platforms means that production may decline, which is usually a positive factor for oil prices.

Whether OPEC Member States and non-OPEC oil-producing countries such as Russia will extend the cut-off agreement remains unclear. Alexander Novak, Russia’s energy minister, said Monday that he could not rule out the possibility of oil falling to $30 a barrel if the cut-off agreement was not extended, Reuters reported.

According to a S&P Global Platts survey, OPEC member countries produced 30.9 million barrels a day in May, the lowest level since February 2015 (before Gabon, Equatorial Guinea and Congo joined OPEC). At that time, Qatar was still a member of the organization. According to the survey, Saudi Arabia’s daily production dropped to 9.7 million barrels per day, the lowest level since January 2015, while Iraq’s production climbed to an all-time high of 4.82 million barrels per day.

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In other energy trades on the New York Mercantile Exchange, the price of RBOB gasoline futures for July delivery fell nearly a cent to $1.730 a gallon, or 0.5 per cent; heating oil futures for July delivery fell 1.9 cents to $1.806 a gallon, or 1 per cent; and natural gas futures for July delivery rose 2 cents to $1 million a British calorie unit. It was $2.357, up 0.9%.