Oil trading alert: Concerns over Hurricane Beryl ease, gasoline inventories unexpectedly rise

Forex Platform- In early Asian trading on Wednesday (July 3), international oil prices fluctuated slightly, and US crude oil is currently trading around $82.98/barrel. Brent crude oil futures and US crude oil futures rose and fell back on Tuesday. After setting a new high of more than two months, they corrected their gains and ended slightly lower. Concerns about supply disruptions caused by Hurricane Beryl gradually eased. Although API inventories fell sharply, API gasoline inventories unexpectedly increased when demand peaked.

Brent crude futures closed down $0.36, or 0.42 percent, to settle at $86.24 a barrel on Tuesday, while U.S. crude futures settled at $82.81 a barrel, down $0.57, or 0.68 percent.

Earlier, U.S. crude rose $1 to hit $84.38 a barrel on concerns that Beryl could have a broader impact on the U.S.-regulated offshore oil-producing region of the northern Gulf of Mexico, at a time when U.S. demand for motor fuel is increasing.

Both indicators rose about 2% on Monday.

Phil Flynn, an analyst at Price Futures Group, said traders were less concerned about supply issues as new forecasts emerged on Monday.

"The market recognises that Beryl will not cause any large-scale offshore oil production disruption," Flynn said. "We may see some production shutdowns, but the impact on the platform will be minimal."

Beryl, currently a Category 5 hurricane, is ravaging the Caribbean and is expected to weaken to a tropical storm when it moves into the Gulf of Mexico later this week, according to the National Hurricane Center.

With the Independence Day holiday coming up on Thursday, U.S. gasoline demand is expected to peak this week. The American Automobile Association (AAA) forecasts that trips during the holiday period will increase by 5.2% compared to 2023, with car trips up 4.8%.

API's latest data shows that API crude oil inventories decreased by 9.163 million barrels last week, much higher than the market expectation of a decrease of 150,000 barrels, but API gasoline inventories unexpectedly increased by 2.468 million barrels, the market is expected to reduce 1.50 million barrels.

Official EIA crude inventories will be released at 22:30 Beijing time. A Reuters poll released on Tuesday showed that U.S. crude and products inventories were expected to decline last week.

Seven analysts polled by Reuters estimated that crude inventories fell by an average of 700,000 barrels in the week ending June 28.

The EIA said crude inventories rose 3.60 million barrels to 460.70 million in the week ending June 21 when analysts expected a reduction of 2.90 million barrels.

Analysts estimate that EIA gasoline inventories fell by about 1.30 million barrels last week, while distillate stocks, including diesel and heating oil, are expected to fall by about 1.20 million barrels.

The survey shows that refinery capacity utilization is expected to increase by 0.7 percentage points from the previous week's 92.2%.

In terms of bullish news, Federal Reserve Chairperson Powell's latest speech was dovish, raising expectations for the Federal Reserve to cut interest rates in September and favoring the outlook for crude oil demand.

Federal Reserve Chairperson Jerome Powell said on Tuesday that the US was back on a "downward inflation trajectory" but that policymakers needed more data to verify whether the recent decline in inflation accurately reflected the state of the economy before cutting interest rates. "I think the last data... and the last data to some extent suggest that we are back on a downward inflation trajectory," Powell said. "Before we start... easing policy, we want to be more confident that inflation is continuing to decline towards 2 per cent." Mr. Powell would not comment on when US interest rate cuts might begin, but acknowledged that the Fed had entered a sensitive phase of policy deliberations and that risks to its inflation and employment targets were "closer to balance", meaning neither could be a full priority when setting policy.

Mr. Goolsbee, the president of the Chicago Fed, said he saw "warning signs" of economic weakness and said the Fed aimed to reduce inflation without putting pressure on the labour market.

After the JOLTS report and Powell's speech, the probability of a September rate cut digested by the U.S. interest rate futures market increased to 69% from about 63% on Monday, according to calculations by the London Stock Exchange Group (LSEG).

In terms of the geopolitical situation, relatively speaking, the market's concern about the geopolitical situation has cooled down, and the pullback pressure on short-term oil prices has increased.

The United States will soon announce more than $2.30 billion in new security assistance to Ukraine, U.S. Defense Secretary Austin said during a meeting with Ukraine's defense minister at the Pentagon. Austin said the latest weapons program for Ukraine will include weapons such as anti-tank weapons and air defense interceptors, and will allow for accelerated procurement of NASAMS and Patriot air defense interceptors.

On July 2 local time, Hungarian Prime Minister Viktor Orban visited Ukraine. This is Orban's first visit to Ukraine since the conflict broke out between Russia and Ukraine. Orban suggested that Ukraine reconsider its previous decision and accept a temporary ceasefire to advance the peace talks with Russia.

Agence France-Presse reported on July 3 that the French presidential palace issued a statement saying that French President Macron had a phone call with Israeli Prime Minister Benjamin Netanyahu on the 2nd, urging the latter to prevent the outbreak of conflict between Israel and Hezbollah in Lebanon. According to the report, the French presidential palace said in the statement that Macron on the phone "reiterated his serious concern about the increase in tensions between Hezbollah and Israel" and mentioned that "it is absolutely necessary to prevent a conflict that will harm the interests of Lebanon and Israel."

On the technical side, from the daily chart, US crude oil fell back after encountering resistance near the high point of more than two months hit on April 26. The longer upper shadow line on the K line, the KDJ high dead fork running, the peak risk and pullback pressure faced by the short-term oil price have increased significantly. Oil prices may step back on the 100-day moving average of 80.30 to confirm. In addition, there is also some support near the 5-day moving average of 82.56 and the 10-day moving average of 81.80, respectively. Last Friday's low was supported at 80.97.

The preliminary resistance above refers to the position near 83.65, and the strong resistance continues to focus on the position near the high of 84.46 on April 26. If the resistance can be broken, it will increase the bullish signal for the market outlook.

This trading day will release the Federal Reserve meeting notes, investors need to focus on, in addition, this trading day will release the United States in June ADP employment data, the United States in June ISM non-manufacturing PMI and the United States in May factory orders monthly rate, investors need to be concerned, in addition, need to pay attention to the Fed officials speech and geopolitical situation related news.

However, because July 4 is the Independence Day holiday in the United States, the market will be closed early this trading day, which may slightly limit the trading space. Investors need to pay attention. The change in the number of initial jobless claims in the United States, which was originally scheduled to be released every Thursday, will be released one trading day earlier this week to Wednesday.