Lead-in: As of July 30, the US-Iran situation had not further escalated, market concerns eased, and international oil prices declined. NYMEX crude oil futures for the September contract fell $0.87/bbl to $83.59, down 1.03% from the previous session; ICE Brent futures for the September contract fell $1.71/bbl to $89.03, down 1.88% from the previous session. China's INE crude oil futures for the 2609 contract rose 26.1 yuan to 561 yuan/bbl, before falling 7.8 yuan to 553.2 yuan/bbl in the night session. The gasoline market rose in tandem, supporting short-term strength in aromatic-related product prices.
1. Gasoline market trends firm, supporting aromatic-related products
Entering the July market, geopolitical conflicts eased in the early part of the month, and crude oil prices continued the downward trajectory from June. Overall negotiation pace remained sluggish, with subdued short-selling sentiment in the market. The gasoline market performed reasonably well, while aromatic-related products, supported by reduced supply, held relatively firm prices that fluctuated below 6,000 yuan/ton. When geopolitical conflicts reignited in mid-July, crude oil quickly surged to elevated levels, with Brent again spiking to $100/bbl. The gasoline market rose modestly, and short-covering by earlier short-position holders drove market transactions to a monthly high of around 6,700 yuan/ton.
2. Analysis of demand-side changes
Geopolitical conflicts remained intermittent, and crude oil futures fluctuated widely, weakening first before strengthening. The gasoline market continued its uptrend, with earlier short-position clients re-entering the market to replenish inventories. Aromatic-related products actively followed the upward momentum. Meanwhile, with previously idled plants yet to resume operations, prices in the Shandong region rose smoothly, on-site auctions saw slight premiums, and overall production-sales balance was maintained.
3. Outlook
On the whole, the US-Iran conflict has reignited, raising geopolitical uncertainty in the Middle East. Shipping disruptions through the Strait of Hormuz and the Bab el-Mandeb Strait persist, intensifying supply-side risks and lending support to oil prices. Entering August, domestic supply growth expectations are strong. Gasoline is supported by summer travel demand, while diesel is underpinned by essential end-user consumption, pointing to an anticipated demand recovery. However, the pace of demand repair is unlikely to keep up with the growth in resource supply, and the loose supply-demand balance will significantly cap the upside for gasoline and diesel prices. Overall, the domestic mainstream gasoline and diesel markets in August are expected to show a volatile pattern of initial weakness followed by recovery. Aromatic-related products have limited room for further output expansion, as most enterprises are shifting primarily to xylene production. Market supply will remain low, with prices largely tracking gasoline fluctuations.
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