U.S.-Iran Next Round Of Talks May Be Held On July 18! Thursday Oil Prices Close Slightly Higher, Futures Across The Board Rise

I. Crude Oil Market Dynamics

On 7/2, as the market awaited progress in the latest U.S.-Iran talks and sentiment remained cautious ahead of the U.S. Independence Day holiday, international crude oil prices edged higher. The NYMEX crude oil August 2024 contract rose $0.11/bbl to $68.69, up 0.16% from the previous session; the ICE Brent September 2024 contract increased $0.23/bbl to $71.80, up 0.32%. China’s INE crude oil futures August 2026 contract fell 18.8 yuan to 441.6 yuan/bbl, and gained 0.2 yuan to 441.8 yuan/bbl in night trading.

Market outlook

Oil prices rose slightly after a nighttime rebound, but during the Asia-Europe session, they continued to decline sharply. U.S. WTI crude oil inventories have dropped to multi-decade lows, and at one point, the near-month spread turned into a discount. SC crude oil fell more than 5%, almost completely erasing gains since 2026. Iraq recently offered significant discounts on Basra crude oil as the delivery grade, putting pressure on SC crude, which experienced a decline much greater than that in the European and American markets. The discount of Dubai spot crude against swap prices has widened to over $4 per barrel, the largest discount since May 2020, as supply-side pressures overwhelm the market.

Saudi Aramco has increased exports from Ras Tanura port and shifted to spot sales. According to reports, since Saudi Arabia resumed tanker loading and unloading in the Persian Gulf, its average daily crude shipments in the six days through Wednesday have surged to 6.3 million barrels, approaching pre-war levels. Previously, the UAE’s exports of crude oil and condensate averaged about 3.7 million barrels per day in June, a record high. In Russia, domestic refining capacity has fallen sharply due to Ukrainian drone strikes, tightening domestic fuel supplies and forcing the country to increase crude exports. Its crude exports are now soaring to record highs, with data showing that in the four weeks through June 28, Russia’s average daily crude exports rose to 4.13 million barrels, leading to a large buildup of crude at sea. As for Iran, since the United States lifted its maritime blockade, exports have exceeded 40 million barrels, but the portion that has not found buyers in time continues to accumulate at sea. Overall, stronger-than-expected supply from multiple countries has created enormous short-term pressure and undermined market confidence, with market expectations being repeatedly revised downward, pushing oil prices further lower.

The intensive negative factors in the short term have led to a decline in oil prices that exceeded many people's expectations. This almost retaliatory drop suggests that the negative pricing for the supply side may be sufficiently priced in, and there may even be an overreaction. Going forward, we will focus on the impact of the short-term increase in supply-side exports, the recovery levels of oil production in various countries, and whether the demand side can show positive recovery signals amid the traditional peak consumption season under high temperatures, stimulated by lower oil prices. Currently, the refining margins for refined oil in Europe and the United States have surged to multi-year highs, and the Asian region, including China—which previously had low refining margins—has generally rebounded, which is expected to boost refinery activity. Often, the most pessimistic moments may mark a turning point; assessing the current oil prices indicates that they may have been oversold, and the risk of a significant further decline in the short term is low. The fact that oil prices began to show some resilience by closing higher in the night session after such a dire situation is noteworthy. Additionally, after the U.S. non-farm payroll data was released Thursday evening, dollar interest rates significantly declined, reflecting the market's interpretation of the data leaning towards a cooling of interest rate hike expectations, which led to a rebound in risk asset prices and created a favorable environment for oil prices to stabilize and rebound. From the perspective of risk-reward assessment, it is currently more cost-effective to seize rebound opportunities, while closely monitoring market expectations and new driving changes. Careful timing and cautious participation are advised.

II. Macroeconomic Market Dynamics

1、Trump: Waller has a somewhat hostile Federal Reserve Board and will continue pushing to remove Governor Cook by "winning the lawsuit."U.S. GDP growth should be between 12% and 13%; knows nothing about cryptocurrency gains, holds a small amount of Nvidia stock, Micron is red-hot, and it is essential to lead in AI; believes Musk will donate SpaceX shares to “Trump Accounts.”

India will expand its crude oil reserves to hedge against the risk of soaring oil prices.

3. Middle East situation—Sources said that the next round of talks between the United States and Iran will be held on July 18.

② Trump: Iran has almost agreed to everything we need.

③ Saudi crude oil exports are nearing pre-war levels, which analysts say are overestimated.

It is reported that major European countries currently believe that it has become inevitable to impose tolls for passage through the Strait of Hormuz.

4、The China Securities Regulatory Commission has approved Unitree Robotics’ STAR Market IPO registration application.

5. The 15th Meeting of the China-UK Joint Commission on Economy and Trade was held in London.

6、Media: Meta’s “long post” has some bias; domestic computing power is in short supply.

The mandatory national standard “Safety Requirements for Combined Driver Assistance Systems of Intelligent and Connected Vehicles” was officially released.

III. Plastic Market Dynamics

International crude oil prices rose on Thursday, and the main futures contracts for plastics-related products all closed higher in night trading.

The Plastic 2609 contract was quoted at 6,865 yuan/ton, up 1.12% from the previous trading day.

The PP2609 contract is quoted at 7,236 yuan/ton, an increase of 1.4% compared to the previous trading day.

The PVC2609 contract was reported at 4,425 yuan/ton, up 0.75% from the previous trading day.

The styrene 2608 contract was quoted at 7,263 yuan per ton, up 0.55% from the previous trading day.

IV. Today's Market Forecast

PP：The market is expected to remain weak, fluctuating downward, as expectations of easing costs on the supply side, coupled with sluggish demand, further intensify the pressure from the supply-demand imbalance. The slower-than-expected recovery in operating rates on the supply side may delay the pace of the market decline.

PE：Supply and demand data overall have weakened compared with the previous period, market trading sentiment is poor, and polyethylene prices are expected to continue falling, by about 50-200 yuan/ton.

PVC：The current domestic PVC spot market trading performance is sluggish, and the spot price center continues to trend downward. On the supply side, short-term maintenance plans at upstream producers have decreased, leading to a slight increase in available market supply. On the demand side, both domestic and export trade have entered the traditional low season, and procurement demand remains weak. Amid the mismatch between supply and demand, industry inventories stay at a high level. Attention should be paid to the impact of raw materials on PVC. It is expected that PVC prices will remain range-bound and fluctuate within a certain band.