U.S. economic data negative oil prices plummet

On July 30, the U.S. WTI crude oil futures market prices fell sharply, with the settlement price of main contracts at $39.92/barrel, down $1.35. Brent crude oil futures market prices fell, with the main contract settlement price at $43.25/barrel, down $0.84. Oil prices fell sharply, mainly due to weak US economic data and political uncertainty.


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The main reason for the sharp decline in oil prices was that the United States released the initial GDP report on the evening of July 30. The data showed that the real GDP of the United States in the second quarter fell by 32.9%, the worst record since the publication of quarterly GDP data in 1947. At the same time, the actual quarterly rate of personal consumption expenditure in the second quarter of the United States recorded – 34.6%, the largest decline in history. As soon as the data was released, oil prices fell sharply, with WTI falling to $38.72/barrel. Uncertainty in the economic outlook has hit oil prices hard.


In addition, trump tweeted that the election was postponed and the US stock market fell sharply. The risky assets represented by crude oil in the commodity market were also sold off, and the downward pressure on prices increased. Investors are generally worried about the chain reaction of the capital market caused by the election delay, which challenges the US Constitution and gives us political uncertainty.


Under the current epidemic situation, while crude oil demand is slowing down, there is also a great risk on the supply side. OPEC + will officially begin to relax the record production reduction on August 1. The crude oil production was cut by 9.7 million barrels / day from May to June. Later, this policy continued to July. But as soon as August enters, the reduction rate of OPEC + production may be discounted. OPEC plans to start from August to this year In the rest of the time, the quota for production reduction will be relaxed by 2 million barrels / day. Although OPEC + hopes for economic recovery, the actual situation is not satisfactory at present. Many negative indicators, including the weak US GDP data, have been suppressed by the epidemic cases. If OPEC + relaxed the production reduction quota, the current pattern of supply and demand balance may be broken again.


On the whole, the business club believes that at present, the oil market is intertwined with long and short positions, and the short position momentum is relatively strong in the short term, and the epidemic situation is still very serious, which is a drag on fuel demand. There are also some uncertainties about the future of the U.S. economic recovery, which will put pressure on oil prices. Superimposed with OPEC + easing production reduction expectations, oil prices still have downward pressure in the near future.


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