Crude oil trading reminder: Strong demand expectations + dollar decline, oil prices rise to the highest level since early May, bulls may continue to attack

In early Asian trading on Tuesday (June 25), international oil prices held at a nearly two-month high, with U.S. crude oil currently trading around $81.74 per barrel. Oil prices rose about 1% on Monday, recording the highest closing price since early May, helped by the prospect of strong summer driving demand, as well as tensions in the Middle East and drone attacks on Russian refineries that have raised concerns about supply. The weaker dollar also exacerbated the strength of crude oil prices.

Brent crude oil futures for August delivery settled at $86.01 per barrel, up $0.77, or 0.9%. U.S. crude oil futures settled at $81.63 per barrel, up $0.90, or 1.1%.

Both indicators rose about 3% last week, the second consecutive week of gains.

Tamas Varga of oil broker PVM said of the seasonal demand for oil products: "The main underlying reason for the strong prices...is the growing belief that global oil inventories will inevitably fall sharply in the northern hemisphere summer."

Oil prices were also supported by geopolitical risks in the Middle East and more drone attacks on Russian refineries by Ukraine.

According to multiple media reports, since the early morning of the 23rd local time, the Israeli army has continued to carry out air strikes and shelling in many places in the Gaza Strip, causing many casualties. Palestinian armed groups said on the 23rd that they would continue to strike Israeli targets in many places in the Gaza Strip.

On June 23rd local time, the governor of Belgorod Oblast, Russia, announced that Belgorod Oblast was attacked by Ukrainian drones that day, which has killed one local civilian and injured three people.

According to the latest news released by the mayor of the Black Sea port city of Sevastopol, the Ukrainian air strikes on the city on the 23rd have killed three people, including two children, and injured nearly 100 people. The Crimean Bridge was temporarily closed due to the air strikes.

Several Russian media outlets quoted a message released by the governor of Bryansk Oblast, Russia, saying that from late night on June 22 to early morning on June 23, local time, the air defense system shot down at least 23 Ukrainian drones in the state, including 12 in one hour. Ukraine has not responded to the Russian statement.

The Russian Ministry of Defense said on June 22 that the Russian army used long-range high-precision weapons and drones to launch cluster strikes on Ukraine's energy infrastructure.

TD Securities commodity strategists pointed out that as tensions between Israel and Lebanon in the Middle East escalate and further ship attacks occur in the Red Sea, crude oil supply risks have once again become the focus of attention. "At this moment, algorithmic capital inflows have provided support to the market after the OPEC+-induced sell-off, and firm price actions have allowed commodity trading advisors (CTAs) to resume bidding for WTI crude oil." "Our energy supply risk indicator has soared again, which can further support price trends in the short term, however, the threshold for algorithmic flows to continue to operate is getting higher and higher."

The decline in the US dollar also makes commodities denominated in US dollars, such as oil, more attractive to buyers using other currencies. The dollar index fell more than 0.32% on Monday to close at 105.49, recording the largest single-day drop in nearly a week and a half, and also far away from the nearly eight-week high hit last week.

Sources said that Ecuador's national oil company, PetroEcuador, has declared force majeure on the export of Napo heavy crude oil due to the closure of pipelines and oil wells caused by heavy rains.

Goldman Sachs analysts said that the global oil market may fall into a supply shortage because the peak of demand is still ten years away. The investment bank estimates that world oil demand will continue to rise for at least the next 10 years, and crude oil demand will peak at 110 million barrels per day in 2034.

Analysts said this is due to rising oil demand in Asia and increased demand for oil products. The bank added that rising demand may trigger supply shortages, especially if companies continue to cut capital expenditures.

A survey conducted by Oil & Gas Magazine showed that spending by six major oil producers, including ExxonMobil and Chevron, may decrease by $3.8 billion this year.

Pay attention to the US API crude oil inventory series data, geopolitical news and speeches by Federal Reserve officials on this trading day.

From a technical perspective, after breaking through the 200-day moving average, U.S. crude oil has remained firmly above the 80 mark. The MACD golden cross is running well, and the KDJ continues to diverge upward. In the short term, oil prices tend to continue to fluctuate higher. Pay attention to the resistance near the April 29 high of 83.91.