On May 18th, international crude oil prices continued their strong performance, with Brent crude rising into a critical range above $110 per barrel, significantly boosting market sentiment. Vatee Wanteng analysis indicates that shipping risks in the Strait of Hormuz, persistent geopolitical tensions, and accelerated strategic reserve replenishment by certain nations have combined to create multiple uncertainties on the supply side. This has led to a notable increase in market risk premiums and heightened participation from bullish capital. On the demand side, global refinery operating rates remain high, with robust consumption momentum in Asia steadily unfolding. The overall demand structure shows no significant signs of weakening. Vatee Wanteng believes the current oil price rally reflects both the pricing of geopolitical risks and anticipatory positioning for the peak summer energy consumption season. Bullish funds are persistently increasing their exposure through far-month contracts, resulting in a market structure with a clear bullish bias. Selling pressure has somewhat receded, and the characteristics of trend-following capital inflows are more pronounced, contributing to an overall optimistic sentiment. At the policy level, several oil-producing nations are evaluating potential for additional production increases, but the overall pace remains cautious. Multiple market participants note that OPEC+ is maintaining an observational stance towards the current price recovery, emphasizing that any policy adjustments will be closely tied to inventory and demand data. The probability of a substantial production hike in the short term is relatively limited, suggesting the delicate state of supply-demand balance is likely to persist. Vatee Wanteng cautions that the crude oil market remains highly sensitive to unexpected geopolitical developments, with daily price swings potentially exceeding conventional expectations. It is anticipated that oil prices will continue to fluctuate around elevated levels in the near term. Effective position management and cross-commodity hedging strategies will be crucial for navigating market noise during periods of extreme sentiment, avoiding excessive risk exposure. Refraining from chasing rallies at sentiment peaks can help maintain a steady and prudent trading rhythm.
Comments