For the first time in the year, crude oil fell sharply in June

International oil prices have continued to adjust from their high levels for three consecutive weeks, showing the first monthly decline this year
.
This past June, New York futures and Brent futures fell nearly 8% and 11%
respectively.

Why has crude oil, which was previously strong, adjusted recently? Will the decline continue? In the view of analysts, under the pattern of tight global energy supply, the high volatility of oil prices around the high center will continue
.

Multiple risks accumulate

Since mid-June, international oil prices, which have been the only one among various assets in the first five months of this year, have fallen sharply, and the net value of crude oil funds, which have been leading during the year, has also retreated
significantly.

Xie Yi, fund manager of Nord Fund, said that crude oil is a strong cyclical variety and is driven by events more frequently, especially on the
supply side.
On the one hand, the upward rise is because the global cycle is at a top-down position, and the top of crude oil may lag somewhat
.

"But the lag this time is more serious, mainly because the situation in Russia and Ukraine has led to a relatively large
impact on the supply side.
" But these factors are gradually fading, and the situation is now that the Russian-Ukrainian war may be nearing its end, or its impact on the supply of energy products is nearing its end
.
The effect of interest rate hikes on the demand side is also gradually reflected, supply and demand will be rebalanced, and prices will return to normal
.
Xie Yi thinks
.

In addition, OPEC began to study the next step of increasing production, coupled with Russia's signal to resume negotiations, the supply side expectations have been adjusted to a certain extent
.
Soochow Futures pointed out that OPEC said all production cuts that began in May 2020 will be fully restored
in August this year.
It has a great
impact on short-term crude oil.
OPEC can effectively release an estimated 3 million b/d
of spare capacity.
Although this part of the effective spare capacity cannot be fully opened in the short term, under this environmental assumption, the short-term crude oil supply pattern will change significantly
.

In addition, the Fed's violent interest rate hike and US lawmakers' proposal to raise taxes on oil companies have further weighed on market confidence and led to a correction
in oil prices.
Compared with the adjustment of the metal market and the agricultural product market, the adjustment of the crude oil market is already very moderate
.

Or will maintain the center of gravity upward

Strong volatility

Respondents believe that the tight global energy supply pattern will still provide key support
to oil prices.

Soochow Futures said that on the whole, if the short-term idle capacity can be fully released, there is still room under the international oil price, but in the medium and long term, international crude oil is still in a state of lack of supply elasticity, and OPEC's withdrawal from production reduction cannot cover up the problem of
insufficient remaining capacity.

The macro strategy department of Bosera Fund pointed out that with the slow increase in production of OPEC and important crude oil exporters such as the United States, the peak season of crude oil demand is coming, the overall supply and demand pattern is tight, and the high volatility of oil prices around the high center under low inventories will continue
.

Ye Shuai, fund manager of the Guangfa Dow Jones Oil Index (QDII), said that overall, the demand for crude oil market continues to grow, but the supply increment is insufficient
.
Although the current market sentiment of fear of supply disruption has eased, the probability of supply-side recovery is actually low
.

"The Fed's interest rate hike is one of the important factors that currently suppress oil prices, but historically, the peak and fall in oil prices generally occurs in the late stage of the interest rate hike cycle, and the current Fed rate hike cycle is still in its early stages, which is expected to cause fluctuations in oil prices without causing its inflection point
.
" In summary, tight supply and demand are expected to keep oil prices high and volatile, and the pullback caused by the Fed's interest rate hike is expected to bring investors a better opportunity
to enter.
Ye Shuai said
.

Commodities may be subject to systemic downside risks

In addition to crude oil, commodities such as energy and metals also began to experience a collective correction in mid-June, and copper prices, known as economic barometers, once fell below the volatility range that had lasted for more than a year
.

Xie Yi, fund manager of Nord Fund, believes that the cycle of commodities is also divided into long and short
.
A short-term top has appeared, and it should be said that crude oil and gold may be the
last to peak.
In terms of medium and long-term cycles, he believes that it may not be over, after raising interest rates, demand falls, and the economy gradually recovers, the price of cyclical goods is likely to rise, and it is expected that we are in a relatively large commodity cycle, which is dominated by supply-side countries and geopolitics and the world pattern, so in the medium term, we can be appropriately optimistic about commodities
.

For investment in crude oil assets, Xie Yi suggested, "To invest in crude oil assets, either do transactions or make allocations
.
" The trading requirements for investors' ability and ability are still relatively high
.
"Therefore, you can consider doing some medium and long-term allocation, if it is determined that the next 5~10 years is a commodity cycle, you can allocate some varieties for a long time to avoid excessive timing and trading, which can help investors avoid losses and improve the probability
of profits.
"