Surge in Crude Oil Prices: Triggered by Dollar Weakness and China's Demand

1. Introduction ─ The Crude Oil Market That Changed Color in a Day

On July 1st during Western trading hours, WTI futures (August contract) closed at $65.45, and North Sea Brent (September contract) ended at $67.11, marking a slight increase of over 0.5% from the previous day. This was the result of a combination of factors including a weakening dollar, signs of recovery in China's manufacturing PMI, and a temporary calm in the Middle East situation.infomoney.com.br

2. Buying Induced by a Weak Dollar

Due to uncertainties surrounding U.S. commercial and fiscal policies, the dollar index continued its downward trend on this day. Since commodities are nominally traded in dollars, a weaker currency has the effect of pushing up the relative real price. The Price Futures Group in Chicago pointed out, "In addition to typical summer demand, the tailwinds from the exchange rate are offsetting the reduction in risk premiums."infomoney.com.br

3. China's Manufacturing PMI Suggests a "Bottoming Out"

The S&P Global/Caixin June manufacturing PMI recovered to over 50 (50.4) for the first time in three months. New orders, mainly domestic, have picked up, supporting market sentiment with expectations of increased demand for the "largest oil-importing country." In fact, during Asian trading hours, the foreign exchange market saw a rise in yuan buying and dollar selling, with resource and transportation stocks leading the way.forexlive.com

4. OPEC+'s "Upside Risk"

However, it's not all buying factors. OPEC+ is likely to decide on an increase in production by 411,000 barrels per day in August, and the scenario of oversupply constantly suppresses the market. ING warned, "If consecutive production increases in August and September are realized, easing will accelerate in the fourth quarter." Kpler also pointed out, "Depending on the cartel's steering, there could be a shift towards a bearish trend."infomoney.com.brtbsnews.netreuters.com

5. Geopolitical Sparks and "Suppressed Risk Premium"

While the de facto ceasefire between Israel and Iran is maintained, Middle Eastern risks such as drone attacks and the rekindling of nuclear agreement negotiations smolder. Finbold introduced an AI forecast stating, "The market assumes 'managed tension,' centering around WTI $72-$75." A lack of explosive spikes is attributed to hedge funds adjusting their positions.finbold.com

6. Real-Time Voices Swirling on Social Media

• @OilWatcher"PMI over 50, is China's demand back⁉️ 65-dollar level might be the bottom #WTI #Brent"

• @MacroHedge"Buying crude oil just because of a weak dollar is dangerous. Wait and see until the OPEC meeting on 7/6"

• @EnergyPolicyJP"It's a chance to build strategic reserves while the Iran situation is calm"

• @AITraderBot"The model calculates a rise to $84 if it breaks $72.80"
  Such posts are scattered, and data confirms that tweet volume increased by about 20% compared to the previous week (from X's hashtag #WTI trend measurement). The temperature difference between optimistic individual investors and cautious professionals is evident.

7. Ripple Effects on the Equity Market

The S&P 500 Energy Sector Index rose for three consecutive days. Chevron and ExxonMobil were bought, and in Brazil, Petrobras shares recorded an increase of over 3%. Expectations of improved refining margins are the background. However, if the production increase scenario becomes a reality, the supply-demand balance will loosen again, and the view that stock price increases are temporary is predominant.investors.com

8. Interviews with Market Participants (Editorial Summary)

9. Future Scenarios

1. Bullish Case: Continued PMI rise, OPEC+ limits production increase → Recovery to the $80 range.

2. Neutral Case: Demand recovery and supply increase are balanced → Range movement between $68-$74.

3. Bearish Case: Full production increase by OPEC+ plus increased U.S. inventory → Drop to around $60.
   The median of AI prediction models is calculated at $72.5.finbold.com

10. Implications for Investors

• The OPEC+ ministerial meeting on July 6 and the EIA weekly inventory statistics on July 10 are the biggest factors.

• If it clearly breaks above $76, Middle Eastern-related news should be checked.

• If the dollar-yen exchange rate falls below 140 yen, there will be dual upward pressure on yen-denominated crude oil prices.

11. Conclusion

This rise can be explained by the "weak dollar + China demand expectations" two-factor, but conversely, it also harbors the fragility of turning into a correction phase the moment either one collapses. It is essential not to underestimate the volatility of the summer lull market and to thoroughly implement diversification and stop-loss rules.