On Wednesday (July 31st), in the morning session of the Asian market, international oil prices were hovering at low levels, with US crude oil currently trading around $75.28 per barrel. Oil prices fell about 1% on Tuesday, closing at a seven week low as investors are concerned that demand from major Asian countries may weaken, and OPEC+seems likely to stick to plans to increase supply.

Although the Israeli airstrike on the southern outskirts of the Lebanese capital has resulted in three deaths, the Israeli military claims that the incident has ended. Some analysts believe that the oil market seems to believe that Israel's attack on Beirut was a one-time event, so it did not provide significant support for oil prices.

Moreover, market participants have been discussing a possible ceasefire agreement in Gaza in recent days, which could lower the geopolitical risk premium of crude oil prices.

Brent futures fell $1.15, or 1.4%, to close at $78.63 for delivery on Tuesday. US crude oil fell $1.08, or 1.4%, on Tuesday, closing at $74.73.

This is the lowest closing price of these two major indicator contracts since June 5th, and has put them in the technical oversold zone for the second consecutive day. US diesel and gasoline futures also closed at their lowest point since early June.

A survey shows that manufacturing activity in Asia, the world's largest crude oil importer, may shrink for the third consecutive month in July. Leaders of major Asian countries have pledged to increase their support for the economy, but investors expect these measures to be limited as the Third Plenum policy meeting largely reaffirmed existing goals.

Bob Yawger, head of energy futures at Mizuho Bank, said in a report that reaching a ceasefire agreement with Hamas "has the potential to eliminate the risk premium of $4 to $7 per barrel from the market.

This Thursday, senior ministers of OPEC+will hold a meeting to review market conditions, including plans to partially withdraw production cuts starting from October. At present, it is expected that there will be no policy adjustments.

Analysts predict that US crude oil will decrease by approximately 1.1 million barrels in the week ending July 26. If the forecast is correct, this will be the first consecutive five week decline in US crude oil inventories since January 2022.

The latest API data shows that US crude oil inventories decreased by 4.495 million barrels last week, marking the fifth consecutive week of decline; Last week, gasoline inventories in the United States decreased by 1.971 million barrels, with market expectations for a decrease of 1.43 million barrels; Last week, the inventory of distillate oil in the United States decreased by 322000 barrels.

The official inventory data from EIA will be released at 22:30, and investors need to pay close attention.

The job vacancies in the United States slightly decreased in June, and last month's data was revised upwards, indicating that the labor market continues to cool down. Analysts say this makes it more likely for the Federal Reserve to cut interest rates.

On this trading day, the US July ADP employment data will also be released, investors need to pay attention. Focus on Federal Reserve resolutions.

The market expects the Federal Reserve to maintain the benchmark overnight interest rate unchanged at its meeting on July 30-31, and signals that interest rate cuts may begin as early as the September meeting.

In addition, pay attention to the upcoming release of China's official manufacturing PMI series data for July, continue to monitor geopolitical news, and keep an eye on market expectations for the OPEC+conference.

OPEC+may adhere to existing production policies at the ministerial meeting on August 1st

Five sources from the OPEC+alliance of oil producing countries have surged, stating that despite the recent sharp drop in oil prices, the OPEC+supervisory committee is unlikely to make any changes to the current production reduction agreement this week, as well as plans to partially withdraw from the agreement starting from October.

OPEC+is an alliance of oil producing countries composed of the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia. The OPEC+ministers will hold an online meeting of the Joint Ministerial Monitoring Committee (JMMC) on Thursday at 18:00 Beijing time.

One of the anonymous sources said, "I don't think we're likely to see any new changes or developments at Thursday's meeting, especially in terms of OPEC+further production restrictions

Oil prices have fallen by about 9% so far this month, trading below $80 per barrel on Tuesday due to the dissipation of geopolitical risks and concerns about the strength of demand from major Asian countries.

OPEC+is currently implementing a series of measures agreed upon since the end of 2022 to reduce total production by 5.86 million barrels per day, accounting for approximately 5.7% of global demand.

At its last meeting held in June, the group agreed to extend its plan to reduce production by 3.66 million barrels per day for one year until the end of 2025, and to extend its recent production reduction plan of 2.2 million barrels per day for eight member countries for three months until the end of September 2024.

OPEC+plans to gradually phase out the 2.2 million barrels per day production reduction plan from October 2024 to September 2025.

JMMC is composed of oil ministers from Saudi Arabia, Russia, and other major oil producing countries, and typically holds meetings every two months to propose policy adjustments.

Daily chart of major US crude oil contracts