The Federal Reserve decided to keep interest rates unchanged last Wednesday. Investors worry that long-term high borrowing costs will curb economic growth in the United States, the world's leading oil consumer, and thus reduce oil demand.
During the holidays, the United States announced that EIA crude oil inventories surged by more than 7 million barrels. Increased supply pressure may be a major factor in the sharp decline in crude oil prices.
In terms of geopolitics, as the Hamas delegation went to Egypt to negotiate ceasefires with Israel, under pressure from the international community, the probability of a ceasefire between Israel and Hamas increased. As the risk of supply cuts continued to decrease, oil prices retreated. All gains since March.
The price of U.S. crude oil fell from US$82.63 to US$78.11 per barrel, and the price of Brent crude oil also fell from US$88.40 to US$82.96 per barrel, a cumulative decline of more than 6%.
Crude oil, as the raw material of the polyester industry chain, has a huge impact on the price of polyester products. In the past few months, due to geopolitical conflicts, there has been a large risk premium in crude oil, which has driven up the price of polyester products, but end-use weaving manufacturers are unwilling to bear the premium. International oil prices plummeted during the May Day period, and the polyester market may pay for this for a long time after the holiday.
Overall, the sharp drop in crude oil has created downward expectations for the polyester market and aggravated the wait-and-see mood of the market. In the future, fluctuations in crude oil will still be one of the most important factors affecting the development of the polyester industry.
Chaos Tiancheng Futures analysis pointed out that geographically, Palestinian-Israeli negotiations have made progress. Hamas may agree to a temporary ceasefire agreement with the guarantee of the United States, but the United States said that the ceasefire may still take a week. The security agreement and ceasefire agreement between Saudi Arabia and the United States are also close to being reached.
Macroscopically, the slowdown in U.S. employment may indicate a weakening economy, and interest rate cut expectations have rebounded. The Palestinian-Israeli peace talks are still fermenting. If the peace talks are reached or Saudi Arabia's output recovers beyond expectations, the OPEC+ meeting will become the next focus of the game, and oil prices will have greater room to fall. Otherwise, crude oil prices will have limited room to fall.
At the same time, the latest view of Hengtai Futures mentioned that the resonance of multiple negative factors has caused oil prices to cool down rapidly, and the macro market sentiment has weakened. On the other hand, ceasefire negotiations between Hamas and Israel have rapidly cooled geopolitical risks, superimposing the demand for crude oil itself. The market sentiment has turned worse than expected. The market is currently focusing on whether OPEC will have a new production reduction plan. The risk of short-term oil price fluctuations is greater, and traders are mainly waiting and watching.
In addition, Galaxy Futures also pointed out that during the May Day holiday, the Palestinian-Israeli ceasefire negotiations advanced and the geo-risk premium continued to fall. U.S. employment data growth slowed, suggesting a downward trend in overall inflation expectations, the Federal Reserve's interest rate cut date was brought forward, demand expectations weakened, and oil prices fell. This month, the market expects that OPEC will extend production cuts to the second half of the year. The supply and demand sides are waiting for new benefits to be realized. The short-term unilateral is expected to stabilize, and the mid-term will be bullish. The Brent operating range in the second quarter is expected to be 80-90 US dollars per barrel.
