NDRC expects oil prices to fluctuate significantly

Although international crude oil prices remained relatively stable in May, recent fluctuations have raised concerns. The price of crude oil has dropped sharply from $72.5 to $68.5 per barrel, prompting increased attention from market observers. According to the latest report from the National Development and Reform Commission's Price Monitoring Center, as summer approaches, more uncertainties are expected to impact both oil production and demand, leading to potential large swings in oil prices. The report explains that the stability in oil prices during May was mainly due to steady U.S. crude oil inventories, rising gasoline stockpiles, OPEC's commitment to maintaining supply and price stability, and no major escalation in Iran's nuclear issue. Additionally, there were no significant geopolitical events or speculative triggers that could drive up prices. Experts at the Price Monitoring Center note that with the Northern Hemisphere entering summer, energy consumption is set to peak again. Demand for electricity, natural gas, coal, and petroleum is expected to rise, while increased travel in the U.S., Europe, and other regions will further boost gasoline consumption. Given the tight balance between supply and demand, this growing demand may push oil prices higher. Moreover, the increased frequency of hurricanes in the marine areas could pose risks to crude oil production, creating opportunities for speculative funds to influence the market. Although the Iranian nuclear issue hasn't worsened, deep-seated differences between Iran and Western countries make a quick resolution unlikely. Meanwhile, ongoing instability in Nigeria could disrupt its oil production at any time, and even minor signs of trouble could cause sharp spikes in global oil prices. Despite these factors, the center also pointed out that while oil prices may experience significant short-term fluctuations, sustained and substantial increases are not expected in the near future. Market participants are advised to remain cautious and monitor developments closely.

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