International oil prices continued to fall, hitting a three-day low, OPEC+ "learned smart"

On Thursday (October 7), international oil prices were under pressure for the second consecutive trading day, hitting a three-day low. The unexpected increase in US crude oil inventories triggered people's concerns about demand after the price rose to a multi-year high.

At 15:24 GMT+8, NYMEX crude oil futures fell 1.42% to US$76.33/barrel; ICE Brent crude oil futures fell 0.84% to US$80.40/barrel. The two cities both hit three-day lows, reaching 76.21 US dollars/barrel and 80.30 US dollars/barrel respectively.


Overnight, NYMEX crude oil and Brent crude oil closed down 2.52% and 2.10%, respectively, despite the intraday highs of $79.78/barrel since November 10, 2014 and $83.47/barrel since October 10, 2018.

ANZ Bank said in a report: “According to EIA data, US commercial crude oil inventories rose last week and gasoline inventories also surged, raising concerns about weak demand.”

The U.S. Energy Information Administration (EIA) said on Wednesday (October 6) that as of the week of October 1, crude oil inventories increased by 2.345 million barrels to 420.9 million barrels, an increase much higher than market expectations of 796,000 barrels. Gasoline inventories unexpectedly soared by 325.6 million barrels, which is expected to decrease by 69,000 barrels; distillate stocks fell by 396,000 barrels, which was less than the expected decrease of 844,000 barrels.

Global oil prices have jumped by more than 50% this year, increasing inflationary pressure, which may slow the recovery of the economy from the new crown epidemic and affect consumer demand. Natural gas and coal prices are also climbing.

Citi analysts said in a report: “OPEC+’s statement contrasts with higher price volatility brought about by tighter market supply and demand, especially when inventories are low. Recently, given the extremely tight supply of raw materials in the power industry, demand for natural gas The skyrocketing drove a surge in oil demand."

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) said earlier this week that they decided to maintain the current policy of increasing production by 400,000 barrels per day each month, and crude oil prices have been pushed to multi-year highs. Sources said on Wednesday that OPEC+ made this decision partly because of concerns about the emergence of a new epidemic and the possible weakening of demand and prices. Based on past lessons, oil-producing countries have become more cautious, and any hasty decision may lead to a sharp drop in oil prices.

Another important reason is money. Three OPEC+ sources said that oil-producing countries are enjoying billowing financial resources to make up for the sharp decline in income during the 2020 COVID-19 outbreak caused by the demand and price collapse.

After the implementation of travel restrictions around the world to curb the spread of the coronavirus, oil demand has paralyzed and severely hit prices. OPEC+ cut production by a record 10 million barrels per day in April 2020, accounting for about 10% of global production. According to OPEC’s annual statistical bulletin, OPEC member countries’ oil export revenue in 2020 was US$321 billion, a decrease of 43% from 2019.

Iraqi Oil Minister Ihsan Abdul Jabbar joked at the Energy Intelligence Forum on Wednesday: “We have a population of 40 million in Iraq, and 85% of our income depends on oil. We hope that the price of oil will reach US$120/barrel!” But he said that US$75-80 For consumers and producers, it is the fair price of oil.